What’s going on with Starbucks stock
Something’s brewing with Starbucks (NASDAQ:SBUX) stock this week. Shares of the coffee chain plummeted as much as 11% this week. At closing Thursday, shares were down roughly 9% relative to last Friday’s.
A significant management shift occurred, adding a lot of commotion.
Why we care
Last month, former Starbucks CEO Kevin Johnson announced that he would be stepping down as chief executive officer on April 4. Johnson has worked at Starbucks for 13 years and served as the company’s CEO for the past five years. Howard Schultz returned to the top job until Starbucks finds a permanent replacement, though he had previously filled the post twice before.
Schultz wasted no time establishing his authority at the company, announcing that he would suspend its stock-buyback plan and commit to increasing investments in baristas and stores. This announcement was a significant turnaround from a pledge made by Starbucks in October 2021 when it promised to spend $20 billion in dividends and acquisitions over the next three years.
There was even more drama. According to a regulatory filing published Tuesday, Starbucks’ General Counsel Rachel Gonzalez will leave the firm on May 20. She will take with her severance, bonuses, and other payments worth more than $7.5 million, in connection with Schultz’s return.
In his return to Starbucks, Schultz has generated a lot of debate. For example, in response to the current employee organizing efforts at Starbucks, he held a town hall meeting for employees. “I’m not an anti-union person. I am pro-Starbucks, pro-partner, pro-Starbucks culture … [and] we didn’t get here by having a union.”
The controversy surrounding Schultz’s remarks and Starbucks’ decision to halt buybacks sent some investors rushing for the doors. However, for those with a long-term perspective, this is likely only another bump to success for Starbucks stock.