In early 2023, Hershey’s shares were trading near $275—the same vicinity where RIM’s short position kicked off (the position has since been closed). By Q1 2025, they’d slumped below $150, underscoring the perils of overconfidence in a seemingly stable business. Nowhere was this more evident than in 2Q 2024, when Hershey reported its worst quarterly sales decline in twenty years: a steep −16.7%.

Share Prices vs. Analysts Estimates

Management broke down the drivers of that plunge as follows: ERP-driven inventory cuts (approximately 9 points,) retailer timing shifts (approximately 6–7 points), discretionary spending pullback, channel migration, merchandising cuts, and category softness.

Just as sales surprises can upend forecasts for a chocolate maker, cost fluctuations add another layer of uncertainty. In 2Q 2025, Hershey’s adjusted gross margin plunged 510 basis points, driven by cocoa price spikes, elevated manufacturing costs, and tariffs. Those headwinds largely offset price increases, productivity gains, and transformation savings. Looking ahead, management projects full-year gross margin erosion of 675–700 basis points—an eye-watering swing that few analysts anticipated twelve months prior - the chart above shows how fast earnings were revised down (dragging with it HSY’s shares).

Cocoa Prices (USD per metric ton)

The Hershey’s saga offers a cautionary tale for forecasting any business: even “mundane” companies confront complexity at every turn, exposing how little control companies might have over outcomes. A case in point is the price of cocoa (see the second chart). Prices surpassed $12,000 per metric ton in late 2014, from an average of around $2,500 per metric ton in prior years. Hershey uses derivatives to try to control commodity price volatility, but something of that magnitude, impacting the most important commodity used in their manufacturing process, can’t be neutralized.

If projecting Hershey’s sales and profits—with its nearly century-old brands and predictable seasonality—can trip up analysts, imagine the challenge of forecasting fast-evolving technology ventures. So approach new and uncharted territories carefully.