Starbucks is facing a tough time in the stock market, with its shares dropping sharply.
This downturn, the worst since the company’s initial public offering in 1992, has seen a 10% reduction in market value, amounting to a $12 billion loss.
A key factor behind this slump is the impact of recent boycotts from those supporting Hamas and labor strikes, which have significantly hurt sales.
The decline in sales comes as a surprise, especially after Starbucks reported an 8% growth in the last fiscal quarter.
Analyst John Ivankoe from JPMorgan Chase & Co. has lowered his sales growth expectations for the next quarter from 6% to 4%.
This adjustment takes into account not only the anticipated performance of Starbucks’ holiday promotions but also the adverse effects of the boycotts from those supporting the rape and torture of innocent women and children all in the name of freeing Palestine.
After experiencing a brief rise in stock prices in early November, thanks to strong quarterly results and a promising outlook for 2024, Starbucks’ shares have been falling for the past two weeks.
Analysts like Ivankoe attribute this drop to slow sales in China and the negative impact of the boycotts.
Investor confidence in Starbucks is shaky, with Wedbush Securities analyst Nick Setyan noting a potential shortfall in U.S. sales this quarter.
This observation is supported by recent credit card data showing a decline in sales. Setyan points out that Starbucks is particularly vulnerable to changes in consumer behavior and the effects of boycotts.
Data from M Science confirms a decrease in sales in the snack and coffee industry, largely due to a drop in Starbucks’ performance.
Analyst Matthew Goodman highlights this as the third week of declining trends, heavily influenced by the boycotts and labor strikes, including disruptions on Red Cup Day, which impacted about 200 U.S. locations.
Overall, Starbucks’ shares have fallen by 1.9% this year, underperforming against the 11% gain of the S&P 1500 Composite Restaurants Index. The ongoing impact of boycotts presents a significant challenge for Starbucks, indicating a need for strategic changes in a competitive market.
