Have Starbucks boycotts finally paid off? SBUX stock crashes after earnings

As war between Israel and Hamas broke out, several companies were publicly targeted as financial supporters for the Israeli side, with Starbucks (NASDAQ: SBUX) being one of them.

The boycotts against Starbucks, particularly in the Middle East, profoundly impacted the company’s operations. The coffee shops were left empty, compelling Starbucks to significantly adjust its financial targets and scale back its operations.

As its latest quarterly report shows, Starbucks’ earnings were significantly impacted, with the company missing Wall Street estimates in most targeted sectors.

Where exactly did Starbucks fall short?

Starbucks’ latest financial report fell short of expectations. Earnings per share (EPS) came in at $0.68, missing the expected $0.79. Revenue also fell below expectations, totaling $8.56 billion instead of the anticipated $9.13 billion. Net income dropped from $908.3 million to $772.4 million compared to the previous year.

Looking ahead, Starbucks adjusted its forecasts for fiscal 2024. Revenue growth is now expected to be in the low single digits, a downgrade from the earlier projection of 7% to 10%. 

Similarly, global and US same-store sales growth forecasts were revised from low single digits to flat, down from 4% to 6%. China’s same-store sales are now expected to decline by single digits, contrasting with the previous growth expectation.

Furthermore, Starbucks anticipates flat to low single-digit growth in earnings per share for fiscal 2024, a departure from the initial forecast of a 15% to 20% increase.

Despite showing signs of recovery in the recent sessions, with a positive 0.18% in the latest trading session and 1.60% in the previous five. SBUX shares fell 12.05% in the pre-market, putting the price at $77.83, notably lower than the closing price of $88.49.

With the trend expected to continue, Starbucks executives don’t see the situation improving until Q4, which might see SBUX shares depreciate even further.

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