Starbucks reopens dining rooms in 800 stores in Shanghai; Is SBUX stock a buy?

Starbucks reopens dining rooms in 800 stores in Shanghai; Is SBUX stock a buy
2 months ago
2 mins read

Shares of the Seattle-based company, Starbucks (NASDAQ: SBUX), have dropped 34% in 2022, on pace for its worst year since 2008. It seems that for investors, issues in China, soaring inflation, and unionization efforts at its stores are clouding the company’s prospects.  

Yet, some good news came on Wednesday, June 29, when a report of the company reopening dining rooms in 800 stores in Shanghai came out. Further, the news that the former CEO Howard Schultz returned to the helm of the company in April could offer some respite to investors. 

The last time the former CEO returned to the company, he slashed costs, and the stock returned an annualized 18.2% from January 2008 to June 2018, when he left the company.  

SBUX chart and analysis 

In short, the last trading session has seen the shares close slightly above the 20-day and 50-day Simple Moving Averages (SMAs), with higher buying volumes noted in the past few days. 

Additionally, on the daily chart, a double bottom formed, which usually indicates a change in trend, which was down for most of the year, with shares down 34% year-to-date (YTD).

SBUX 20-50-200 SMA lines chart. Source. Finviz.com data. See more stocks here.

On the other hand, 12 out of 21 TipRanks analysts have a buy rating on the shares, with the rating consensus at a moderate buy. Moreover, for the next 12 months, the average price seen by analysts could reach $93.62, 22.49% higher than the current trading price of $76.43.

Wall Street SBUX analysts’ price targets for SBUX. Source: TipRanks

Restaurants have had a challenging year as investors started abandoning the big pandemic winners. This could be related to the fact that consumers are not receiving government checks when inflation is rising along with gas prices, possibly crimping discretionary spending. 

Moreover, the return of Schultz could give some investors peace of mind that the company has experienced leadership in a time of crisis like it did in 2008.

Indeed the range of outcomes is vast, but some positive news like encouraging data from China and a new/old leader could be just what this distressed stock needs to return to its former glory.

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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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Dino Kurbegovic

Dino is an investor and technology enthusiast with years of experience in managing complex projects. At Finbold he covers stories on stocks, investing, micro and macroeconomic trends. Also, he’s also building a micro solar power plants in his hometown.