Shares of Dow component The Coca-Cola Company (KO) took a massive 8.4% dive on Thursday after its pre-market earnings release. This knockout blow represented the worst single-day loss for the company since the 2008 financial crisis. From Wednesday’s close at $49.79 per share, shares of Coca-Cola stock gapped down sharply on Thursday morning and ultimately closed the trading day at $45.59.

Coca-Cola Lowers Earnings Outlook

The fourth-quarter earnings release on Thursday morning matched profit and revenue estimates but lowered guidance for fiscal 2019 earnings per share (EPS). Coca-Cola’s CEO James Quincey said that several factors contributed to the weaker guidance. These factors include changes in tax rates, currency values, and interest rates.

Quincey also said, “we are being prudent in our outlook for 2019 given the multiple reductions in global economic growth outlook for 2018 and our own experiences in some of the emerging and developing markets.”

Investors Pummel Coca-Cola (KO) Stock

Investors were apparently deeply disappointed by the lowered outlook, pressuring the stock down to more than a three-month low. In the process, the stock also dipped below several key support levels. These include: the late December low, the key 200-day moving average, and a major rising trend line extending back to the May 2018 low.

What May Come Next for KO?

Will Coca-Cola’s stock continue to tank, or was this plunge way overdone? Thursday’s sharp dive may well have been an overreaction. But KO’s historical price action shows that when the stock gaps down and drops severely, it typically continues to fall in subsequent trading sessions before eventually resuming in the direction of the long-term bullish trend. Overall, we are still bullish on this stock in the long term. In the short term, though, there could very well be continued volatility and downside.

Disclosure: Disclosure: At the time of this article’s publication, we have no position in any security or trade/investment mentioned, nor do we have any business relationship with any company whose stock may be mentioned.