How Starbucks can unlock shareholder value as activist pressure adds to its troubles

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How Starbucks can unlock shareholder value as activist pressure adds to its troubles
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Activist investor Elliott Investment Management took an undisclosed stake in Starbucks, putting pressure on the coffee chain to prove its turnaround plans...

Following the news, Starbucks ' stock price rose nearly 7% after market close, having fallen more than 21% in the past year. On Monday, shares opened lower, down roughly 3%.

"Investors have questioned Elliott’s experience and track record in the consumer sector, we believe that an external nudge may accelerate making bold decisions and may offer interesting risk-reward opportunities for long-term investors willing to accept that a turnaround may take time," Bernstein analyst Danilo Gargiulo wrote in a note to clients.

But the value deals may "dilute the brand perception" of being premium "in the long-run," Gargiulo added in his note. Starbucks condemned the notion, but the perception already sparked a boycott, prompting CEO Laxman Narasimhan, who stepped into the role in March 2023, to issue anStarbucks needs to "accelerate the roll-out of Siren system that addresses the on-grounds issues of barista and store partners and beef-up back-of-the house operations for digital orders," like a second makeline similar to Chipotle Last quarter, China saw the biggest drop of all Starbucks segments, with same-store sales down...

"Intense competition is the natural state of restaurant markets and even the strongest brands are not insulated," she said. "The direction of SBUX's China same-store sales growth is strongly correlated with those of other global brands. And all are correlated with macro factors .

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