Who thinks Starbucks is going to $5?
Answers
474 points
spider348 answered one year ago …
I like it under $9 for a trip south. "IF", "THEN" only for me.
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2183 points
ChaosNantuko answered one year ago …
I definitely agree with Spider on this one. From a TA standpoint, SBUX going below 9 is very bearish.
From a more fundamental standpoint, i don't think they've adequately prepared for a continuation of the economic downturn. They were previously planning on opening another 900 stores worldwide next year. They've brought that number down to 700. Yet in a worsening global economic environment, i don't think 3$ coffee will sell. Its frequently stated that the market leads the economy by approximately 18 months. While the exact timing is definitely an approximation, if that holds true, then we have at least another year and a half of bad economic conditions to look foward too, more likely 2 years. Their insistence on opening net 700 new stores next year, despite the fact that they will most likely be losing money on existing stores for the next year or 2, feels like a bad decision that will likely send them downwards in the long term.
Which is a really long way of saying yes, i can see $5 happening. Especially if it goes below 9, and especially if the economy doesn't pull a miracle reversal.
118 points
HardOpinion answered one year ago …
It takes more than just market sentiment and statistical theory to gauge a company and its real worth. In the case of Starbucks, their recent Managers Conference in New Orleans seems to done little to re-energize the people who can make a difference. I agree with ChaosNatuko, a $3 coffee in a consumer tightening market is going to affect sales profits. But Starbucks and investors can't just blame poor performance on the economic conditions that prevail. The internal fundamentals have to be looked at closely. Starbucks has lost its way. Barista's were recruited to make coffee and create an experience - now Starbucks needs SALES PEOPLE to up-sell other products - tough if we agree that consumers are not spending. Starbucks do not train their people on the basics of "selling" and enhancing retail opportunities - serious problem! The new Gold Card for $25 does not benefit the local stores - all that revenue goes directly to corporate - the cost of the "free coffee" when a card is bought does however come off the local stores bottom line! So, where is the incentive for store managers to sell these cards? As with any business, the real people who can make or break any company are those who interact directly with that businesses customers. If store staff are not suitably motivated or properly trained to maximize revenue opportunities then we see a further decline in profitability and share value. Is $5 possible - YES! Once the sentiment and the $9 psychological barriers are breached, it will not be be a bear run it will be freefall!
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121 points
eqwittydotcom answered 9 months ago …
I don't know about $5, but certainly I think it is overvalued at 38x earnings. Starbucks is no longer a growth company, but a contracting firm finally coming around to play defense in light of current economic conditions.
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