Coca-Cola’s (KO) 10-year contract with Green Mountain Coffee Roasters (GMCR), along with an investment in the firm, is one of those unusual game changer announcements. Similar to an oil company discovering a large reserve or, perhaps even better, Steve Jobs announcing the iPad, GMCR’s fundamentals changed overnight.
Better yet, those fundamentals cannot be calculated yet, so how well Green Mountain will fare (and how high GMCR will rise) is left up to investors’ imaginations. As has happened before (even to Green Mountain), a new product with seemingly unlimited market potential can create a dramatic stock price run-up amid excitement and ever-expanding growth expectations.
This article is published on SeekingAlpha.com