Starbucks Stock in Freefall After Earnings Come Up Short
Starbucks stock plunged out of the gate Wednesday after the coffee chain reported earnings. Here's what you need to know.
Starbucks (SBUX) stock plunged more than 15% at the start of Wednesday's trading session after the coffee retailer came up short of top- and bottom-line expectations for its fiscal second quarter and lowered its full-year outlook.
In the three months ended March 31, Starbucks said its revenue decreased 2% from the year-ago period to $8.6 billion. Earnings per share (EPS) were down 14% to 68 cents, while global comparable-store sales fell 4% from its fiscal Q2 2023.
"In a highly challenged environment, this quarter's results do not reflect the power of our brand, our capabilities or the opportunities ahead," Starbucks CEO Laxman Narasimhan said in a statement. "It did not meet our expectations, but we understand the specific challenges and opportunities immediately in front of us."
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The quarterly results fell woefully short of analysts' expectations. According to CNBC, Wall Street was calling for revenue of $9.1 billion, earnings of 79 cents per share and global comparable-store sales growth of 1%.
As a result of the disappointing first half of the year, Starbucks lowered its full-year outlook, with Narasimhan citing "a more cautious consumer" as one of the reasons for the downwardly revised forecast.
On the company's conference call, Starbucks Chief Financial Officer Rachel Ruggeri said fiscal 2024 revenue growth is now expected to be in the low single digits from its previous range of 7% to 10%, and EPS growth in the range of flat to low single digits from its previous range of 15% to 20%.
"While it was a difficult quarter, we learned from our own underperformance and sharpened our focus with a comprehensive roadmap of well thought out actions making the path forward clear," Ruggeri said. "On this path, we remain committed to our disciplined approach to capital allocation as we navigate this complex and dynamic environment."
Where does Starbucks stock stand with analysts?
Starbucks was already struggling on the charts ahead of its fiscal Q2 results. Shares were down nearly 8% for the year-to-date through the April 30 close vs a roughly 6% gain for the broader S&P 500.
And Jefferies analyst Andy Barish sees an "uphill battle ahead" for Starbucks. The "question facing the company and investors is whether these challenges are more transitory or longer-term issues, i.e. brand, relevance, and competitiveness, especially in China," Barish says. The analyst has a Hold rating on SBUX and lowered his price target to $84 from $91 after the company's appearance on the earnings calendar.
Still, most of Wall Street remains upbeat on the consumer discretionary stock. According to S&P Global Market Intelligence, the consensus analyst target price for SBUX stock is $94.47, representing implied upside of more than 27% to current levels. Additionally, the consensus recommendation is Buy.
Related Content
-
The Top 10 Side Gigs For Retirees In 2026Money is freedom in retirement; here’s how to earn more of it with a profitable side gig
-
3 Retirement Changes to Watch in 2026: Tax EditionRetirement Taxes Between the Social Security "senior bonus" phaseout and changes to Roth tax rules, your 2026 retirement plan may need an update. Here's what to know.
-
The 'Yes, And...' Rule for RetirementRetirement rarely follows the script. That’s why the best retirees learn to improvise.
-
What Not to Do After Inheriting Wealth: 4 Mistakes That Could Cost You EverythingGen X and Millennials are expected to receive trillions of dollars in inheritance. Unless it's managed properly, the money could slip through their fingers.
-
'The Money Prism' Solves Retirement Money's Biggest Headache: Here's HowThis simple, three-zone system (Blue for bills, Green for paycheck, Red for growth) helps you organize your retirement savings by purpose and time.
-
No, AI Can't Plan Your Retirement: This (Human) Investment Adviser Explains WhyAI has infinite uses. But creating an accurate retirement strategy based on your unique goals is one place where its possibilities seem lacking.
-
A Value Focus Clips Returns for This Mairs & Power Growth FundRough years for UnitedHealth and Fiserv have weighed on returns for one of our favorite mutual funds.
-
Small-Cap Stocks Gain Momentum. That's Good News for This iShares ETFThe clouds appear to be parting for small-cap stocks, which bodes well for one of our favorite exchange-traded funds.
-
Don't Let a 60/40 Portfolio Derail Your Retirement: Why a Cookie-Cutter Approach Could Cost YouChoosing a personalized retirement investment plan, rather than relying on the 60/40 portfolio, could help protect your savings and ensure long-term growth.
-
Are You Winging Your Retirement Plan? A Wealth Adviser's Tips to Help Build Wealth and Navigate RiskIf you have no strategy tying together your accounts or haven't modeled scenarios to make sure your savings will last, then your plan is probably inefficient.
-
Divide and Conquer: Your Annual Financial Plan Made Easy, Courtesy of a Financial AdviserOverwhelmed by your financial to-do list? Split it into four quarters and assign each one goals that connect to the time of year. It could be life-changing.
