McDonald’s Corporation (NYSE:MCD) dropped about 6% on September 23, marking its biggest one-day decline in more than a year and pushing the stock to a four-year low. The company’s investor day failed to provide Wall Street with enough confidence that the U.S. turnaround will happen quickly. Shares are now down roughly 22% this year and have posted their longest weekly losing streak since 2014. The bigger issue for investors now is whether billions of dollars in turnaround spending will pay off before McDonald’s loses the U.S. customer.
McDonald’s may look tempting after the selloff, especially for dividend investors, but 6 Dividend Kings ranked ahead of it. See which stocks hedge funds favored more.
What McDonald’s Announced?
On September 23, McDonald’s introduced its McDonald’s > NEXT plan, which included up to $8.5 billion in franchisee support through 2036. The spending will cover rent relief, new kitchen equipment, restaurant remodels, and ArchIQ, an artificial intelligence system designed to take orders and manage inventory. The company expects to reach a low-to-mid 50% operating margin by 2030, up from 46.1% in 2025, and add about $100,000 in annual cash flow per U.S. restaurant. The plan follows a weak second quarter, when U.S. comparable sales rose just 0.8%, and Reuters reports that management expects traffic to remain flat as inflation continues. This is also raising another debate: Has McDonald’s really lost its moat due to eating habits since the emergence of GLP-1 drugs?
Why the Market Isn’t Buying It?
Weak traffic among lower-income consumers remains the core issue, and management does not expect a quick recovery. Restaurant remodels and NEXT upgrades could cost at least $1.2 million for the average U.S. location, with McDonald’s providing some rent relief and capital support. Still, the selloff has brought the valuation down to about 19 times trailing earnings, near the lower end of its historical range. With a dividend yield of around 3% and 50 consecutive years of dividend increases, the stock now looks less like a broken growth story and more like a defensive value play. But there’s a catch! We think there are 6 stocks that are much better dividend plays than MCD.
McDonald’s is asking investors to finance an expensive turnaround for a demand problem that may persist. At the same time, its franchise economics remain intact, and the valuation has fallen to multi-year lows, leaving the stock priced as if the turnaround is already destined to fail.
McDonald’s is seeing some cooling in institutional interest, as the number of hedge funds holding the stock fell from 83 at the end of Q1 2026 to 79 at the end of Q2 2026. The decline indicates that professional investors are cutting positions while the U.S. turnaround remains uncertain. However, the short interest stood at only 1.94% of float as of August 31, 2026.
The data suggests most investors are moving away from the stock rather than betting against it. The deteriorating fundamentals and the lack of positive investor sentiment have hurt the stock’s performance, leaving investors to worry about the company’s future.
READ NEXT: Shopify Opens Its Doors to Muse, Here’s Why Amazon Won’t, And NASA’s $946 Million SpaceX Award Extends Crew Dragon Through 2030, But Redundancy Remains Uncertain
