Tootsie Roll Is Down 11%. What History Says

Tootsie Roll Is Down 11% in 111 Days. What History Says

Tootsie Roll Industries, Inc. (TR) is down 11% from its all-time high as of August 6, 2026, and has been falling for 111 days. The Drawdown Severity Score™ stands at 2.0, placing the stock in the yellow zone after transitioning from the green zone. In 27 comparable prior drops of this depth, the stock took an average of 484 days to recover.

Why Tootsie Roll Crossed Into the Yellow Zone

The primary catalyst for this downward movement is the company's recent financial performance. According to a report by Quiver Quantitative, Tootsie Roll Industries released its Q2 2026 earnings showing revenue declines and operating losses. This negative financial momentum has weighed heavily on the share price, driving it down from its peak.

In addition to the weak earnings report, institutional trading activity has shifted. GuruFocus reported that BlackRock, Inc. trimmed its stake in the company. Even with this reduction, the shares still trade 26% above their GF Value, which has caused some market participants to reassess the current valuation.

These fundamental challenges have interrupted what was previously a stable period for the stock. The transition from the green zone to the yellow zone indicates that the selling pressure is no longer just minor market noise. It has now developed into a more prolonged correction.

Breaking Down the Current Severity and Drawdown Numbers

As of August 6, 2026, the stock trades at $39.75, representing a -11.3% drawdown from its all-time high of $44.81. The decline has persisted for 111 days. This duration has now surpassed the company's historical average drawdown duration of 107 days.

Because the drawdown has exceeded both typical depth and duration averages, our system has assigned a Drawdown Severity Score™ of 2.0. This score represents a Moderately Elevated risk level, shifting the asset into the yellow zone. Previously, the stock resided in the green zone, where pullbacks are considered minor and temporary.

Historically, the company has experienced 133 total drawdown events. The average maximum drawdown across all of these historical events is -6.8%. The current -11.3% drop is nearly double that historical average, highlighting the unusual nature of the current sell-off.

Historical Context: How Prior Drops of This Depth Played Out

To understand what this yellow zone transition means for investors, we must examine how the stock behaved during past corrections of similar magnitude. Tootsie Roll Industries, Inc. has dropped 10% or more from its peak exactly 27 times in its history.

When the stock breaches the 10% drawdown threshold, the recovery timeline historically extends by a wide margin. The average duration of these comparable 10%+ drops is 484 days. This is more than four times longer than the average duration of 107 days for all 133 historical drawdown events.

The table below contrasts the current drawdown metrics against these historical benchmarks to provide clear context:

This historical data shows that once the stock enters a double-digit drawdown, it typically spends a prolonged period consolidating or recovering. The current duration of 111 days is still early in the cycle when compared to the historical 484-day average for similar pullbacks.

Industry and Institutional Activity Context

The consumer staples sector, particularly confectionery, has faced headwinds due to fluctuating raw material costs. Sugar and cocoa prices have experienced high volatility over the past year, directly affecting the operating margins of candy manufacturers. These industry-wide pressures help explain the operating losses highlighted in the Q2 2026 earnings report.

Institutional investors are reacting to these pressures with mixed strategies. While BlackRock, Inc. trimmed its position, other major players are stepping in. MarketBeat reported that Dimensional Fund Advisors LP recently acquired shares of the company, indicating that some institutional buyers see long-term stability in the business model despite the current drawdown.

Tootsie Roll Industries possesses a unique capital structure, with significant family control and dual-class shares. This structure often insulates the company from aggressive activist pressure, but it can also lead to lower trading liquidity. Lower liquidity sometimes prolongs the duration of drawdowns, as trading volumes may not be high enough to quickly absorb selling pressure.

The Data Picture: Analyzing the Yellow Zone Transition

The Drawdown Severity Score™ of 2.0 is designed to strip away emotional reactions to market drops. By categorizing this move into the yellow zone, our system flags that the stock has moved past standard statistical variance.

In past market cycles, a transition to the yellow zone has served as an early warning signal. For conservative investors, this zone change indicates that capital preservation risk has increased. The historical record of 27 comparable drops shows that the stock rarely recovers quickly once it crosses this threshold.

Rather than predicting a bottom, the data suggests that patience is historically required. The 484-day average recovery duration for 10%+ drops shows that the stock often undergoes lengthy periods of base-building before reclaiming its previous highs.

What Changes This: Factors to Monitor

Several key indicators could alter the current Drawdown Severity Score™ for the stock. On the positive side, a stabilization of raw material costs could improve operating margins in the coming quarters. If the company reports a return to profitability and revenue growth in its next earnings release, the stock could begin to recover.

A price recovery toward the all-time high of $44.81 would systematically lower the drawdown percentage and return the asset to the green zone. This would signal that the current correction was shorter than the historical 484-day average for 10% drops.

On the negative side, further revenue declines or continued operating losses could deepen the drawdown. If the stock price continues to fall, the Drawdown Severity Score™ will rise, potentially pushing the asset into the orange or red zones. Continued institutional selling by large stake-holders would also act as a catalyst for a deeper correction.