Starbucks (NASDAQ:SBUX) stock rose 2.5% in pre-market trading this morning after investor took a stake in the coffee chain.
Starboard Value has joined Elliott Management in .
Starbucks opened today at about $76 per share, with a market capitalization of about $87 billion. The shares are down almost 20% in 2024 and last traded over $100 last November.
Trouble at Coffee Mill
Starbucks has problems around the world.
China, once the company’s crown jewel, saw sales declines of 11% in the latest quarter. Lower-price are just one problem. American brands as tensions rise. The company’s sophistication is a bad fit for small Chinese towns and villages.
Belinda Wong, who has led the brand there since 2011, and Molly Liu, who joined her at the top , have tried innovating their way out. They introduced coffee flavored with and even . They also joined Starbucks’ to hotel chain Hilton (NYSE:HLT).
On the other side of Asia, Starbucks laid off thousands of employees early this year in response to “operating difficulties” caused by .
In the U.S., Starbucks faces continuing despite winning against activists. Rivals Dutch Bros (NYSE:BROS) Black Rifle (NYSE:BRCC), and chains serving are also taking share.
The activists may not care about any of this. They seem more interested in ideas like or boosting the dividend, which now yields 3%.
CEO Laxman Narasimhan took over just last year. He insists efforts to take back market share and improve profits through efficiency are . But he also faces continual criticism from the man who hired him, .
SBUX Stock: What Happens Next?
Starbucks faces an existential crisis. It sought quick profits in tiny shops and automation, forgetting that people went to its stores to sit down.
The company’s identity crisis looks unlikely to be resolved soon.
On the date of publication, Dana Blankenhorn did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
