Starbucks is facing an unparalleled financial catastrophe following a record-breaking 11-day losing streak for its stock.
A poor Christmas advertising, slow sales in China, and investor fears over recent boycotts and labor strikes are some of the reasons for the loss, which erased 9.4% of Starbucks’ market value, or almost $11 billion.
This marks the first time in Starbucks history that the company’s stock has dropped in value for more than 11 days in a row. Poor sales in its primary US market, where inflation has significantly reduced its consumers’ spending power, seem to be the key contributing issue.
Starbucks shares have been declining over the last two weeks, despite an early November spike brought on by better-than-expected quarterly results and a bullish sales estimate for 2024.
The drop is attributed to three weeks in a row of lower sales, which have been caused by labor strikes and boycotts. One such strike, the Red Cup Day walkout, affected about 200 US stores.
Starbucks Boycott
The boycotts at the chain of restaurants located in Seattle, Washington, have a long history and deal with delicate geopolitical concerns. The corporation got into trouble after Starbucks Workers United, the union that represents many of its baristas, tweeted its support for Palestinians.
“Amid an ongoing boycott due to the Israeli occupation’s aggression against the Gaza strip, the undercurrent of discontent signals a challenging brew for the company’s future,” a market expert stated.
The boycott of Starbucks, which is a part of a larger movement against international brands that are supposedly backing the Israeli occupation’s assault against the Gaza Strip, may have contributed to the recent decline.
Given the outspoken support for the Israeli Occupation by former CEO Howard Schultz, this boycott intensifies long-standing calls for a Starbucks boycott. All things considered, Starbucks is going through a difficult time, which has raised investor anxiety in the face of the company’s unprecedented losses.
Nearly two months into the conflict between Israel and Hamas, demonstrations against certain businesses that are allegedly pro-Israel are still taking place. Real-life events occurring on different sides of the globe are linked by a constant stream of social media appeals to maintain the pressure.
Most of the calls have been directed towards two businesses: Starbucks and McDonald’s. Even while every business has made an effort to disassociate itself from the conflict and has released a statement stating that they neither support nor donate to the government or military of Israel, this hasn’t done much to stop demands for a boycott on the internet.
The use of the hashtag “#boycottstarbucks” peaked in early November and is still widely used, according to data made public by TikTok. Over the last 30 days, it has been utilized on 7,000 TikTok videos in the US, receiving a total of 51 million views.
Starbucks Faces Boycott Calls Over Union Palestinian Supporthttps://t.co/tIbsJYkLgQ
— Newsweek (@Newsweek) October 13, 2023
Using the hashtag “#boycottmcdonalds” on over 3,000 TikTok videos with 10 million views within the same time period, the trend has been comparable. Additionally, a lot of videos discussing the boycotts don’t include hashtags.
Shortly after the conflict itself, a widespread online movement to boycott McDonald’s and Starbucks was born. Social internet is how Tesneem, a Palestinian Canadian who has been blogging about the dire conditions in the overcrowded and impoverished Gaza Strip for years, found out about the boycott movement.
According to Tesneem, the Starbucks Workers United (SWU), a union with over 360 participating stores and over 9,000 employees (whom the company refers to as partners), was the target of boycott calls after the company sued it for posting a message on its X account that read “Solidarity with Palestine” following the October 7 Hamas attack.
As previously documented by the Guardian, Starbucks’ harsh anti-union measures, such as closing unionized outlets, were already causing unfavorable sentiment toward the company to simmer.
Starbucks Stocks
Analysts are worried about Starbucks’ cooling tendencies, especially in light of the possible underperformance in US comparable sales for the upcoming quarter. The recent decline has investors concerned.
Nick Setyan, an analyst at Wedbush Securities Inc., pointed out that credit-card data showing a slowdown over the last three weeks suggests that sales may not have reached expectations.
The stock of Starbucks fell for 12 straight stock market sessions, the longest run since the business went public in 1992. The stock is currently trading at about USD 95.80 per share, down from its yearly high of USD 115.
In the face of critical international challenges, the corporation has refuted any misconduct in the instances. Nevertheless, it still has a reputation to uphold.
Starbucks CEO Laxman Narasimhan expressed confidence on a recent call with analysts over the company’s ability to engage customers across a variety of channels and in spite of macroeconomic challenges and shifting consumer behavior.
According to reports, Starbucks in Egypt reduced staff in late November as a result of the boycott’s financial impact, which forced the company to make cost reductions.
Starbucks is an American firm that runs the world’s largest chain of coffee shops and one of the most well-known brands. With its main office located in Seattle, Washington, the corporation has over 35,000 outlets operating in 80 countries as of 2022.
While it wasn’t the first large coffee chain in the United States, Starbucks was the first to develop and widely propagate a specific type of café culture.
Starbucks started marketing coffee as a comprehensive experience that integrated atmosphere, community, function, and lifestyle in the 1990s. Starbucks became one of the most well-known brands in the coffee shop business and saw enormous growth by changing people’s perceptions of coffee and coffee shops.
