A Large Activist Shark is swimming towards Pepsi

Activist investor Elliott Investment Management is shaking things up again. This time, it’s PepsiCo in the hot seat. Elliott has built a massive $4 billion stake in the soda-and-snacks giant and is pushing for big changes to lift Pepsi’s sagging stock.

Pepsi’s Problem

PepsiCo has been losing ground. Its classic cola just fell to fourth place in U.S. sales — behind Coke, Dr Pepper, and even Sprite. On top of that, its once high-flying food business (think Doritos, Lay’s, Quaker) is slowing, with growth decelerating every quarter since late 2022.

The result? PepsiCo’s market value has dropped from a peak of $270 billion in 2023 to about $200 billion today — a 25% hit. Meanwhile, Coca-Cola is sitting pretty near all-time highs, valued at almost $300 billion.

Pepsi's share price has underperformed the SP500 and Coca-cola since 2023.

In addition to its namesake cola, PepsiCo brands include Mountain Dew, Gatorade, Lay’s, Doritos and Quaker Oats. It recently acquired the probiotic soda brand Poppi and tortilla-chip maker Siete Foods. 

## Elliott’s Playbook

Elliott wants PepsiCo to refranchise its bottling network, copying Coke’s 2017 move that streamlined operations and juiced profitability. The activist also urged PepsiCo to trim underperforming brands and give investors a clearer strategy.

In fact, Elliott thinks these moves could boost Pepsi’s stock by 50%. Investors seem intrigued — Pepsi shares jumped 5% on the news.

## Why It Matters

For years, Pepsi has leaned more heavily on snacks while letting its beverage business lag. But with soda under pressure and consumers getting pickier, that imbalance is catching up. Some analysts even argue Pepsi would be stronger if its food and beverage businesses were split apart.

It’s not the first time either — Nelson Peltz tried pushing for a Pepsi spinoff a decade ago. That went nowhere. Now Elliott, one of the most aggressive activists on Wall Street, is taking its shot.

## Pepsi’s Response

CEO Ramon Laguarta says the focus is on “offering more value.” Pepsi has been relaunching snack staples like Lay’s and Tostitos with cleaner ingredients, rolling out new marketing, and finding efficiencies — like delivering chips and soda together instead of in separate trucks.

There are some bright spots too. Pepsi Zero Sugar is gaining traction, and the company recently saw share gains in both its food and beverage units. But the pressure from activists means “good enough” won’t cut it anymore.

## My Take

This is a textbook activist-investor play: buy a huge stake, push for structural changes, and aim to unlock shareholder value. The real question is whether PepsiCo’s leadership resists or embraces the pressure.

For investors, here’s the lesson: activists hunt where value is trapped. If PepsiCo can execute — refranchise, streamline, and refocus — the upside could be big. But if it stalls? Expect Elliott to keep tightening the screws. More research is required from me before I decide to take a position, but I do like Pepsi's recent M&A activity, specifically the acquisition of Poppi