PepsiCo (PEP) has landed a high-profile activist investor on its roster.
Elliott Investment Management has confirmed that it will take a $4 billion position in the soda and snack giant, individuals with knowledge of the situation told Yahoo Finance.
PepsiCo stock jumped 3% during morning trading. The investment comes at a challenging time for PepsiCo, whose stock has slipped over 2% year to date and is off over 13% in the past 12 months, compared to the S&P 500’s (^GSPC) 9% gain.
“PepsiCo finds itself at a critical inflection point. The Company has an opportunity — and an obligation — to improve financial performance and regain its position as an industry leader,” Elliot wrote in a letter to PepsiCo.
Making the necessary changes could open a “path to more than 50% stock-price increase from today’s depressed levels,” the letter said. The firm wrote that it wants to help the company sharpen its focus, drive innovation, boost efficiency, and unlock value in its already leading brands.
The activist is known for pushing major strategic changes at companies where it sees untapped potential or underperformance, including Southwest Airlines (LUV) and Starbucks (SBUX).
This isn’t PepsiCo’s first clash with an activist investor. In 2015, it reached a truce after a years-long fight with billionaire investor Nelson Peltz.
Elliott’s arrival could act as a catalyst. PepsiCo has been grappling with softening demand across its drinks and snacks divisions. In beverages, PepsiCo has steadily lost ground to Coca-Cola (KO) and Keurig Dr Pepper (KDP).
As consumers increasingly turn to alternatives like flavored waters, energy drinks, and zero-sugar options, PepsiCo has adapted by investing in brands like Bubly and Celsius. But its core soda business continues to face headwinds.
In food, PepsiCo’s once-resilient snacks portfolio, which includes brands like Lay’s, Doritos, and Cheetos, is also under pressure. Higher prices, tariffs, and shifting consumer preferences toward health have made it harder for the company to maintain momentum.
Elliot said in its letter to PepsiCo that its “problems are within its power to address.” The firm’s sizable stake suggests it sees room for deeper moves to boost profitability and reignite growth.
Wall Street remains cautious.
“Better-than-feared,” Evercore ISI analyst Robert Ottenstein wrote, pointing to PepsiCo’s ability to flex its “productivity muscle” through cost savings and automation. Evercore raised its price target to $150 from $140 but kept an In Line rating, signaling the stock is unlikely to outperform without clear US growth.
PepsiCo reported second quarter earnings in July that beat Wall Street’s expectations. During the period, revenue reached $22.7 billion, topping consensus estimates of $22.3 billion. Adjusted earnings per share came in at $2.12, above expectations of $2.03, according to Bloomberg data.
Looking ahead, Ottenstein expects PepsiCo to lean on new product innovation, including higher-protein foods and portion-controlled snacks. But external pressures remain, from tariffs and cuts to government food benefits to political scrutiny of processed foods.
“PepsiCo maintains an active and productive dialogue with our shareholders and values constructive input on delivering long-term shareholder value,” the company said in a statement to Yahoo Finance, noting that it’s reviewing Elliott’s presentation.
The company said its current strategy includes “targeted investments in innovation, portfolio transformation, and international growth as well as corporate-wide, multiyear productivity initiatives.”
Francisco Velasquez is a Reporter at Yahoo Finance. He can be reached on LinkedIn and X, or via email at francisco.velasquez@yahooinc.com.
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