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).
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.
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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