Amid concerns that Orlando-based Tupperware Brands Corp. (NYSE: TUP) may be delisted from the stock market as it sinks beneath a heavy debt load, BlackRock Inc. (NYSE: BLK) has stepped in as an investment partner, according to a Securities and Exchange Commission filing dated July 7. This could mean things are looking up.
BlackRock is one of the largest private equity firms in the world, specializing in investment, advisory and risk management services. Neither Tupperware nor BlackRock representatives were available for comment by press time.
“In situations like this, you’ll see large private equity firms help take publicly traded businesses private and reorganize their debt,” said founder and CEO Dena Jalbert of Align Business Advisory Services, who isn't working with either company.
The situation Jalbert referred to is tied to the June 7 notice received by Tupperware from the NYSE that it was not in compliance with Sections 802.01B and 802.01C of the NYSE Listed Company Manual — news shared in a company news release.
At that point, the company's market cap was less than $50 million, and the average closing price of Tupperware’s common stock was less than $1 for 30 consecutive trading days. Also, Tupperware still hasn't filed its quarterly report due April 1.
Tupperware, an enduring brand
According to Jalbert, there’s something to save: “What Tupperware is betting on is that BlackRock will leverage that brand and its history — there's certainly value there — and there’s an infrastructure, a great employee base.
“If Tupperware can be freed of the shackle around its ankle, it can be more flexible and innovative,” she said. “If all your cash is going toward servicing debt, it’s hard to make other investments to improve the businesses. But now, Tupperware has an investment partner who's got experience with turnarounds, who's done it in the past, and BlackRock is the biggest.”
Retail has changed significantly in recent years, with shoppers getting anything they want delivered to their door at the click of a button. “Tupperware was a novelty; its availability was niche and bespoke, and buyers could only get it through direct-sales agents,” said Jalbert. “Given how shopping works now, people won’t go looking for Tupperware when there are similar alternatives in their faces. Tupperware saw that it needed to diversify sales channels, but by the time it got a distribution deal with Target in 2022, it was too little, too late.”
If the relationship with BlackRock is successful, she said, Tupperware could take on new life in a different form. "The old model won't work anymore."
Tupperware stock explosion
When Tupperware’s stock shot up more than 75% on July 24, it saw its largest daily gain ever. While there was nothing obvious — like new information — to pin that on, Jalbert said it appeared that day traders, seeing Tupperware on the brink, tried to make some short-term gains. “Part of it is also that they’re betting against hedge funds that, by definition, hedge on the downward trajectory of companies in crisis.”
In other words, day traders are behaving as activists, as we saw with GameStop trading during the pandemic. Users from the Reddit page r/wallstreetbets, which was created in 2012 as a resource for day traders, took advice from the forum to buy GameStop stock, which they did en masse. Stock prices soared, and institutional investors who bet against the company had to back out. The phenomenon is called a "short squeeze. "
Jalbert noted that typically, a short squeeze doesn't have a bearing on a company's long-term prognosis, but AMC Theaters is an exception to the rule: "They had their little rally, they took that cash and put it to work and are now finding themselves on the other side. Cash is the lifeblood of any business, right?"
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