Starbucks’ Stock Slump: More Trouble Ahead

BY ANDY SWAN

Starbucks (SBUX) is having one heck of a month – and we believe this could just be the beginning of the coffee giant’s troubles.

SBUX started November on a high note, rallying on a better-than-expected earnings report that featured:

✓ Record consolidated net revenues of $9.37 billion, up 11% year-over-year

✓ Earnings per share (EPS) of $1.06, handily beating the 97 cents Wall Street was expecting

✓ Comparable same-store sales growth of 8% (globally as well as in North America)

But the excitement was short-lived, and SBUX quickly reversed into a record 12-day slump that took the stock down about 12% from those November highs…

Despite the strong performance – driven by higher-priced drinks – Starbucks’ forecast for fiscal 2024 was cautiously optimistic. The company projected modest same-store sales growth of 5% to 7%, a slight dip from its long-term forecast that indicated a tempering of expectations.

A third-party report then came out with slowing November sales data for Starbucks, suggesting its holiday sales season may be even more tepid than first thought.

Talk about a rollercoaster.

Starbucks hadn’t seen a decline like this in its 30-plus years of trading.

But while the immediate stock performance grabs headlines…

We believe Starbucks’ losing streak – as bad as it is – could be overshadowing even deeper, more systemic issues within the company.

From degrading consumer metrics to rising competition in China, our analysis suggests that Starbucks is facing more profound challenges that could shape its future.

Take a look at what SBUX is up against…

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Until next time,

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