If the Cracker Barrel market puke has anything to teach Wall Street, it’s that investors who are deciding where to put their money must add corporate “wokeness” to their menu of risks to digest.
In fact, making “woke” an investing risk factor — in some cases as important as the direction of interest rates and inflation — seems so obvious that I hesitated to write this column. Recall Bud Light’s Dylan Mulvaney fiasco, or Target CEO Brian Cornell’s recent exit following his ill-fated obsession with DEI.
Wokeness is generally defined as subjecting the culture and business to left-wing dogma involving race, sex and viewing all things Americana as anathema. It simply doesn’t sell to mass audiences.
And yet companies keep going there. Corporate managers, it turns out, are a politically and socially tone-deaf bunch. They are lousy at reading the current mood of the country and its hatred of progressive indoctrination — whether in the classroom or when they simply want to enjoy a beer. Their advisers may be even worse.
That’s why shareholders must demand — whether it’s at annual meetings, on earnings calls or with testy phone calls to Investor Relations — that the C-suite extricate wokeness from corporate decision-making.
While it’s not mainstream, there are some savvy Wall Street types adding “woke risk” to their models, just not using that exact terminology. Bob Sloan, founder of the data analytics firm S3 Partners (and my co-host on the “Risk and Return” podcast), is among them. For weeks he has been watching Cracker Barrel’s stock for an unconventional catalyst that could send it higher or lower.
The data he came across suggested the stock was ripe for something big even if big isn’t something you might associate with Cracker Barrel. It’s a relatively sleepy restaurant chain that has been around for decades.
It features country-style food at highway rest stops mainly in middle America. It’s known for its yellow signage and its image of “Uncle Herschel,” an old white guy clad in overalls and seated next to the eponymous barrel.
It has a smallish market cap; around $1.2 billion. It’s profitable though it faces some headwinds like all mature businesses.
What caught Sloan’s eye a few weeks ago is what S3 specializes in: Looking at investor sentiment around a stock. That is, the degree to which investors believed in the stock and were “active” longs (they might buy more under the right conditions), and those who were bearish, so-called active shorts betting against it and willing to double down on their bets.
Sloan noticed the active long and short sentiment was pretty evenly split. “That means all it takes is some event to move shares significantly in either direction,” he tells me.
Cracker Barrel shares, trading under the symbol of CBRL on the Nasdaq, were placed on Sloan’s “battleground stock list,” meaning they were poised for a move in either direction depending on the catalyst.
That catalyst, of course, was a new logo with what was perceived as woke overtones. Gone was Uncle Herschel and his barrel. Remaining was the company name against its standard yellow background.
The internet erupted. The stock on Thursday lost nearly $100 million in market value.
Wait to rebrand
“Moral of this story is if you’re going to do a rebranding of this type with long and short sentiment so evenly split, you should wait,” Sloan said.
But as outlined in my book “Go Woke Go Broke; The Inside Story of the Radicalization of Corporate America,” waiting is often not an option. For all the customer backlash against woke image-making, it remains a staple in marketing departments looking to appeal to new audiences including those that don’t exist.
That goes double for the image-making clique on Madison Avenue. They haven’t changed nor will they, which is something Wall Street must now consider.
In a statement to The Post, Cracker Barrel said Uncle Herschel hasn’t been totally canceled, and that customers can find him on the chains’ menus. “Our values haven’t changed, and the heart and soul of Cracker Barrel haven’t changed,” it added.
But the damage is done from an investor standpoint, with a stock most people never heard of becoming a lightning rod in the cultural wars and feeling the pain. Sloan notes that American Eagle faced similar market dynamics as Cracker Barrel, but the company didn’t embrace a woke rebranding.
Instead, the jeans retailer went non-woke; it re-branded with an all-American hottie Sydney Sweeney ad. That pissed off the cultural left that bizarrely attempted to frame it as a play on white nationalism. It delighted the rest of us — consumers and stockholders alike — because anti-woke messaging sells. American Eagle shares are up around 20% in the month since the ad first appeared.
My advice to Wall Street, stock analysts and investors is to keep a Post-it note on your computer with this simple message: “Go Woke, Go Broke.” Keep reminding yourself of that — and start reminding corporate managers.
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