2 Signals Working in Favor of Starbucks Stock

SBUX's latest C-suite shakeup is giving analysts hope

Managing Editor
Apr 1, 2022 at 11:05 AM
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Subscribers to Chart of the Week received this commentary on Sunday, March 27.

Within the last several years on Wall Street, we’ve seen our fair share of volatile trading, the broader market taking several historic blows. Food and drink retail chains were no exception to this market turmoil, with the likes of coffee leader Starbucks Corporation (NASDAQ:SBUX) one of many still attempting to work toward a path of long-term recovery. However, this type of volatility is far from unusual for the security, with many of its major retreats dating back to the early to mid-1990s.

Now triggering the latest round of volatility for Starbucks investors is another series of C-suite changes. On March 16, the coffee company announced that CEO Kevin Johnson is retiring, and the enigmatic Howard Schultz will step in as interim CEO while the search for a permanent replacement is underway. Schultz has a long history with Starbucks, including filling the chief executive role two times previously.

The move to choose Schultz as interim CEO could be considered bold by some, though not entirely surprising. The business mogul’s long history with Starbucks spans all the way back to 1982, but hosts a rocky past with a large chunk of the nearly 350,000 U.S. employees. Over the past decade, several locations in the U.S. have leaned toward making the coffee chain a unionized workplace, mainly to help push wage increases, a broader voice in the company, and a better work environment.

Since the efforts began in late 2021, a Buffalo, NY location has become the only unionized store in the U.S. However, over 100 locations have since applied to be recognized as unions, a sour taste for the incoming interim CEO. Schultz has a history of pushing back against the company developing worker unions, giving speeches encouraging employees that he would "listen to their concerns."

Nevertheless, Starbucks stock has a long history of enjoying the return of Schultz’s reign. Back in late 2008 and 2009, the beverage name bottomed out with the broader market, but previously saw a steady elevation in shares from the beginning of SBUX’s public trading in the early 1990s to 2000, when Schultz first left the position. Upon his return between 2008 to 2017, another ascension of SBUX shares took place.

However, within the past five years, the equity has seen several historic pullbacks, including a steep selloff during the early 2020 broader-market plunge. Lessening the blow of these drops has been the stock’s 1,000-day moving average, as well as the $50 level (since 2015). Currently, SBUX is facing off with the former trendline, suffering a nearly two-year low of $78.92 on March 14, just ahead of Johnson’s retirement announcement.


While we can’t be exactly sure of what to expect from the shares of Starbucks stock in the coming months and years, analysts do seem hopeful about the C-suite update. Credit Suisse analyst Lauren Silberman praised Schultz, calling him a "revered leader" and "uniquely well-qualified." What’s more, SBUX enjoyed a more then 5% jump on the day of the CEO announcement -- its highest daily percentage gain since November 2020. In simpler terms, despite the shares nosedive from its July 2021 record highs and a now 25% year-to-date deficit, the future may be looking brighter for Starbucks stock.


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