Why Has Starbucks Lost $11 Billion in Market Value?
Starbucks is undoubtedly one of the biggest names in coffee. In fact, for some, it’s synonymous with “coffee shop.”
However, the mega-company lost a whopping $11 billion in market value this quarter, and with many people wondering why, there are quite a few interesting theories going around.
Let’s Take a Look at the Numbers
For years, Starbucks has been extremely successful in both popularity and profits. People love the coffee and treats, and the shareholders love taking home buckets of money.
But the company’s stock market value has been plummeting since November. Share prices are down by 9% since last month, which means an $11 billion loss to its market cap.
Starbucks is Still Making Money
It’s vital to understand that Starbucks hasn’t made $11 billion less than it was supposed to this month. In fact, overall, the company is still doing well and making significant profits at its 35,711 stores around the world.
The reason why the stock price fell so significantly is that the company isn’t making as much as it anticipated, which directly affects the shareholder’s opinions and, consequently, the market cap.
Why Has Starbucks’ Stock Crashed?
When it comes to why Starbucks isn’t pulling in quite as much as it expected to, there are several different theories but no definite answer.
Some say it’s a simple lack of foot traffic and demand, others say it’s due to the ongoing employee boycott, and others report it was Starbucks’ reaction to a tweet about the Israel-Hamas war in Palestine.
A General Lack of Demand for Starbucks
The first possibility, and one that many experts support, is that there is simply a diminished demand this month.
It could be because Starbucks has raised its prices to match inflation over the year, there are more coffee shops opening in almost every neighborhood, inflation has caused more Americans to budget for the holiday season, or a simple anomaly in the number of people visiting Starbucks this month.
The Union Walk Out
The second reason some say could be causing the slight decrease in growth is the recent walkout and unionization of Starbucks employees.
On November 16, 2023, Starbucks workers all around the country walked off the job and began to strike for their rights to unionize. And a month later, many are still on strike as the Starbucks Workers United president, Lynne Fox, continues to negotiate with the company.
The Strike Could Undoubtedly Be Affecting the Stock Prices
Realistically, there are numerous things that could affect a stock share price. It’s not just about profits but also about how the company is running.
On December 13, 2023, the CEO of Starbucks, Laxman Narasimhan, finally released a labor report to its shareholders, which they asked for in March, and its contents could absolutely have led to a decrease in market value.
The Israel-Hamas conflict is undoubtedly on everyone’s mind these days, with people and businesses displaying words of support on their social media for both the citizens of Palestine and Israel. But one group that no one can support is the Hamas terrorists.
On October 7, 2023, Hamas led a deadly attack, and hours later, Starbucks Workers United posted a tweet with the words “Solidarity with Palestine!” and a photo of a Hamas bulldozer. The organization almost immediately took it down, claiming it was not authorized and does in no way mean they support the terrorist group.
Starbucks Sued Workers United for the Post
Since Starbucks Workers United uses the Starbucks logo for their X (formerly Twitter) account, people around the world called out for a boycott of the entire company for the allegedly anti-Palestinian post.
Of course, Starbucks then had to try to explain it wasn’t them who posted the Hamas bulldozer and then proceeded to sue Starbucks Workers United for using their trademark logo in the post.
Are People Actually Boycotting Starbucks?
Now, there has certainly been talk about boycotting Starbucks from those who support a free Palestine and Israel, as well as those who are rooting for the union workers. However, Starbucks hasn’t reported any major differences in sales.
Other companies, such as Bud Light, lost billions of dollars in profits when they were boycotted. So, if people are boycotting Starbucks, the company can’t really tell.
A Possible Hidden Reason for Starbucks’ Decline
Some believe there is a possible, less obvious, reason for Starbucks’ $11 billion decrease in stock valuation: The current economy in China.
A large part of Starbucks’ business is done across the Pacific in China, and as its national economy is currently struggling, it could absolutely be the reason why the company’s stock has taken such a downturn this month.
Starbucks Isn’t Hoping for a Busy Holiday Season, but They Are Looking Forward to 2024
While people love to speculate as to why Starbucks’ stock dropped so significantly, no one really knows because no one truly understands what happens on the stock market. Share prices jump and drop on a daily basis.
But while Starbucks isn’t expecting to come back from the fall within the next two weeks over the holidays, they are certainly looking forward to a busy and profitable 2024, just as they have every year since its inception.