Starbucks Has One Disturbing Problem That Even Its Biggest Fanboys Would Admit Is a Major Issue

 | Jul 19, 2017 | 10:21 AM EDT
  • Comment
  • Print Print
  • Print
Stock quotes in this article:














If you listen to Starbucks (SBUX) execs, then everything at the coffee giant is amazing. 

Do some work in Microsoft (MSFT) Excel (as the analysts at Credit Suisse did below on Wednesday), and a glaring issue comes to light. That is, for all its digital leadership and ability to crank out new, more expensive drinks, Starbucks sales are on a long-term downtrend. Seeing as employee hourly wages and benefit costs are on the rise, as are costs to open new locations, a stubborn downtrend in sales is very unwelcome. It's especially unwelcome as most on Wall Street remain obsessed with Starbucks' growth prospects -- they could be in for some unfortunate surprises on the bottom line over the next year as a result.

The sales downtrend could force Starbucks down two paths, which come with negative consequences of their own. First, raise prices and risk sending people to Dunkin' Donuts (DNKN) or McDonald's (MCD) . Or two, whip up a boatload of new drinks and foods that go onto slow up order flow and tick off customers (which sends them to the aforementioned fast-food rivals). 

While Starbucks figures this out, yours truly is off to enjoy his $5 large coffee from La Columbe. All about full disclosure. 

Starbucks sales on a long-term downtrend $SBUX

— Brian Sozzi (@BrianSozzi) July 19, 2017

(Source for chart: Credit Suisse)

What's Smoking Hot On TheStreet

Facebook could have a monster quarter: All signs -- from Snapchat's (SNAP) slowing user growth to more Instagram users -- point to a blowout quarter from Facebook (FB) next week. Wall Street obviously agrees. Needham raised its target price to $185 from $165 on Wednesday, with analyst Laura Martin striking a bullish tone on user growth.

"Our channel checks indicate more robust advertising revenue growth than we previously projected owing to more video ads (i.e., higher CPMs), faster Instagram revenue growth, and lower competition from SNAP than we had previously projected," Martin wrote.

Facebook is now "becoming the de facto near-monopoly mobile choice for brands and direct response (i.e., lead-gen) advertisers," she added. If Facebook shares don't trade higher after this quarter, then it's time to start selling all your stocks -- the stock market will be dangerously overvalued

This is ridiculous: Although I am a day behind here, the topic of horse meat is still worthy of a few words. Wild horse advocates are fighting to make sure the House Appropriations Committee maintains a legal barrier that bars the slaughter of wild horses for their meat.

Last week the committee took a step towards allowing horse slaughter in the U.S. by knocking down a ban on horse meat inspections by the Agriculture Department, USA Today reports.

Congress has for years prohibited horse slaughter operations by not giving funding for federal horse meat inspectors. Following a debate last week, the Committee in a 25-27 vote did not extend the prohibition into next year.

Guys, say no to horse meat. Insane.


Anyone for some tinned horse?? #horsemeat #dinner #Tajikistan #adventure

A post shared by saddlesorenomads (@saddlesorenomads) on

Apple iPhone 8 pricing looks insane: Apple's (AAPL) upcoming iPhone, the iPhone Pro a.k.a the iPhone 8, isn't going to be delayed, but it will cost more due to higher production expenses, JPMorgan said in a note to clients on Wednesday.

The firm increased its expected average selling price for the 10th anniversary version of the smart phone to $1,100, a $100 increase from its previous estimate. Start saving, people. 

Starbucks is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells SBUX? Learn more now.

More of What's Trending on TheStreet:

Columnist Conversations

View Chart »  View in New Window »
View Chart »  View in New Window »



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.