Quote from VATcal on 15/03/2024, 19:12

Reckitt Benckiser (RKT.L) experienced a significant stock price plunge on Friday.

• Cause: The drop stemmed from a US jury verdict in Illinois. The jury ordered Reckitt's unit Mead Johnson to pay $60 million to the mother of a premature baby who died after consuming Enfamil formula.
• Severity: This verdict sparked fears of mounting financial liabilities from hundreds of ongoing lawsuits against the company regarding its Enfamil baby formula.
• Impact:
  • Shares witnessed a plunge of over 15% on the day, marking the steepest one-day drop since 1999.
  • The closing price settled at a 10-year low for the company.
  • This decline significantly impacted the broader FTSE 100 index, leading to a slight decrease.

Reasons for the investor jitters:

• The $60 million judgment served as a precedent and potential indicator of larger settlements in the future lawsuits.
• This verdict comes on the heels of disappointing financial results reported by Reckitt in February 2024, further eroding investor confidence.

Looking ahead:

• The lawsuit situation and potential repercussions are likely to continue affecting Reckitt's stock price in the near future.
• Investors are apprehensive about the company's ability to manage the legal challenges and their financial implications.