What are the potential risks and upside to PepsiCo's valuation if Elliott's suggested actions are implemented versus if they are rejected?

If Elliott’s proposals are adopted

Elliott typically pushes for aggressive capital‑allocation changes – a larger dividend or buy‑back, a spin‑off of non‑core snack assets, and tighter cost discipline. If the board follows through, PepsiCo’s earnings‑per‑share could rise quickly as cash is returned to shareholders and the balance sheet is streamlined. The “value‑unlock” narrative would likely lift the stock from its current 12‑month range (≈$165‑$185) toward the upper end of the 2024‑25 consensus target (≈$200), giving a 15‑20 % upside on a risk‑adjusted basis. From a technical standpoint, the move would provide a catalytic breakout above the 50‑day EMA and could trigger a short‑cover rally in the 200‑day EMA zone, adding momentum to the upside. The primary risk in this scenario is execution: a hasty divestiture or overly aggressive share repurchase could strain cash flow, especially if consumer‑price inflation persists, and any mis‑step could compress margins and force the stock back below the 200‑day trend line.

If the board rejects Elliott’s agenda

A rejection would signal confidence in the status quo, but it also leaves the “activist discount” unaddressed. Investors may continue to price in the risk that PepsiCo’s growth is capped by its legacy portfolio, keeping the valuation multiples (≈22× forward EPS) below peers with more aggressive capital returns. In a bear‑case, the stock could drift lower, retesting the 200‑day EMA around $160 and potentially sliding toward the 100‑day EMA near $150 if earnings guidance softens or if the broader consumer discretionary sector faces headwinds. The downside risk is amplified by a possible escalation of the activist campaign—legal battles, proxy fights, or a public tender offer could increase volatility and depress the share price further. Conversely, the upside in a reject‑scenario is limited to incremental operational improvements; any upside would be modest (5‑8 % upside to the current price) unless management later announces a surprise capital‑return program.

Trading implication: A long position with a tight stop just below the 200‑day EMA (~$155) is attractive if you believe the board will concede to at least some of Elliott’s proposals, targeting a 15 % rally to $190‑$200. If you anticipate a stalemate, consider a neutral/short‑biased stance with a put spread or a collar to protect against a potential proxy‑fight‑driven decline, while still preserving upside from quarterly earnings beats. Monitoring proxy‑vote filings and any interim shareholder communication over the next 4‑6 weeks will be key to timing the trade.