Starbucks (SBUX) has always been a hot topic for investors and analysts alike, but one analyst’s long-standing criticism of the coffee giant is making waves once again.
In a recent op-ed, the analyst revealed their history of being hypercritical of Starbucks, dating back to their days as a stock analyst. They recalled spending weeks inside Starbucks stores, studying every aspect of the company’s operations in order to make an informed call on the stock. This extreme exercise did not sit well with Starbucks management, but the analyst was determined to do what they believed was necessary.
In 2014, the analyst made a bold move by downgrading Starbucks to a Sell rating, citing concerns about the company’s complex operating system and its impact on margins, sales potential, and employee relations. This decision was met with pushback from Starbucks, but the analyst stood by their call.
Fast forward to the present day, and the analyst is once again questioning Starbucks’ strategy in the wake of a disappointing earnings call. The company’s new products, such as the lavender latte, are not resonating with consumers, and its efforts to cater to the evening crowd are falling flat. Additionally, the company’s struggles in China and its failure to deliver enough value to cost-conscious consumers are raising red flags for the analyst.
As Starbucks CEO Laxman Narasimhan approaches his one-year anniversary in the top job, the pressure is on for him to turn things around. If the company’s new initiatives this summer fail to stabilize its performance, Narasimhan could find himself on the hot seat.
With Starbucks’ stock plunging 12% in premarket trading following the earnings call, it’s clear that investors are taking notice of the company’s challenges. As the analyst reflects on their history of criticism towards Starbucks, it’s clear that the company’s current struggles are a far cry from the Starbucks they remember in 2014.
