PepsiCo Faces Dual Challenges: Activist Pressure and Legal Action

PepsiCo finds itself navigating a complex landscape of investor activism and legal scrutiny. The company is contending with a significant new class-action lawsuit while simultaneously managing demands from a major activist shareholder for strategic changes. This confluence of events is creating uncertainty for the market.

Elliott Investment Management has built a substantial stake in PepsiCo, valued at approximately $4 billion, positioning itself as one of the beverage giant's largest active shareholders. The activist firm is pushing for a comprehensive strategic overhaul. Central to its demands is a proposal for PepsiCo to transition its bottling network to a franchise model, mirroring the structure employed by rival Coca-Cola, with the aim of improving capital efficiency.

Elliott has specifically highlighted the underperformance of PepsiCo's North American beverage division. This criticism is amplified by the recent loss of its number-two position in the U.S. soda market to Dr Pepper, a symbolic setback for the company. Furthermore, the volume for its Frito-Lay North America snack division has recently declined by about 2.5 percent.

Revived Allegations of Price-Fixing

Adding to the corporate pressure, a class-action lawsuit was filed against both PepsiCo and Walmart on December 15, 2025, in the U.S. District Court for the Southern District of New York. The suit alleges the two companies colluded to artificially inflate prices for Pepsi products at competing retailers, while Walmart itself benefited from preferential pricing.

Should investors sell immediately? Or is it worth buying Pepsi?

This legal action revives concerns that had previously surfaced in the market. The U.S. Federal Trade Commission (FTC) had initiated a similar investigation earlier in the year, which was subsequently closed in May 2025. With consumers now pursuing the matter directly, investors are weighing the potential financial impact of substantial damages, which could further strain the company's already pressured profit margins.

Market Outlook and Investor Sentiment

PepsiCo shares are currently trading near $143. Analyst sentiment appears cautious. Barclays has set a price target of $144, suggesting limited near-term upside potential. The stock holds a Zacks Rank of 3, indicating a "Hold" recommendation and a lack of short-term earnings momentum.

All eyes are now on the upcoming quarterly earnings report scheduled for early February 2026. This presentation is viewed as a critical opportunity for management to provide clarity on both the ongoing legal proceedings and its strategic response to activist demands. Until such clarity emerges, the equity is likely to experience continued volatility.