Tupperware stock surging despite warning of business failure. Why?

globalnews.ca:

Tupperware, the well-known maker of food storage containers, has seen its stock soar in recent weeks despite warning earlier in the year its fate may soon be sealed.

In April, the 77-year-old firm said it was in danger of going out of business if it could not raise new financing, being weighed down by a US$705 million debt burden and slumping sales. The news sent its stock down by nearly 50 per cent shortly afterward.

Four months later, Tupperware’s stock is suddenly on the up – rising as much as 700 per cent over the past several trading sessions, having analysts searching for answers as to why.

“What’s going on in the stock market with Tupperware is very different from what’s happening from Tupperware’s business fundamentals,” said Stephen Foerster, a finance professor at Western University’s Ivey Business School.

Tupperware earned a reputation in the 1950s and 1960s as an innovator of kitchen solutions, when it introduced its plastic, air-tight food containers and began marketing them through “Tupperware parties” directly in consumers’ homes.

But in the current economy, the company has faced challenges.

“It’s a company that’s been around for 77 years. We all know it through its plastic storage containers … but it’s really struggled more recently to attract younger customers, to differentiate, to really capitalize on e-commerce,” Foerster said.

In an effort to modernize its business model, Tupperware struck a deal last year with U.S. retail chain Target to sell products in their stores, but on April 7 it released a regulatory filing that reported there is “substantial doubt” about the company’s ability to continue to operate.

Tupperware warned it would not have enough capital to continue operations if it didn’t secure