Starbucks Is In Trouble…
Summary
Transcript
I’ve got a story out of Zero Hedge. It’s entitled Starbucks on the brink of the worst crash since dot com after stunning earnings miss. I guess they’re giving up market share to Dutch brothers and Pete’s. Weird. Says here, Starbucks shares plummeted 16% during the early cash session, approaching the negative or down 16. 2% level last seen during the COVID crash. And I don’t know if you know this, but there’s a lot of really cool people that work at Starbucks.
I’m not bagging on them. I’m just bagging on the ones that are still wearing the masks. I mean, it’s almost like there’s a culture there. I’m not, I’m just saying, type one if you agree with that. Type two if you’re like, no, no, they are total trendsetters over there. All right, it says here, if, oh, oh, and just so you know, I am at this specific Starbucks for a very special reason because it has really hurt the business of a business all the way over there, that building way over there.
And I’m gonna tell you a story after this story is done, all right? Because I think it’s absolutely disgusting and I don’t think it’s the only Starbucks doing it. As a matter of fact, I know it’s not. Says here, if intraday losses surpass 16. 2% or remain above this level of closing, it would mark the company’s worst single day loss since the dot com crash in early 2000.
Starbucks reported what’s perhaps the worst set of results of any large company so far this quarter. Analyst Adam Chrisofully of Vital Knowledge wrote in a note, William Blair downgraded the coffee chain siding last quarter stunning across the board miss on all key metrics. Well, let me explain this to you really quick, Mr. Adam Chrisofully. It’s really easy, overpriced coffee, nationwide inflation crisis means no sales, no sales. See, I know Spanish.
All right, it says here Starbucks reported a 4% drop in same store sales in the second quarter compared with the same period last year while analysts tracked by Bloomberg were expecting growth. What? Wait a minute, somewhere there’s an analyst that was wrong? Guarantee you that analyst lost his wings, but it’s okay because people on CNBC will still tout how smart they are. Thank you, academia. The company’s top geographic segments are showing a pullback in consumer spending on Tuesday.
Evening CEO, Laxman, Mm, Hushman, and I really butchered that one. Started the earnings call with the investors by clarifying his unhappiness with last quarter’s results. Don’t you want that from CEO? Hey guys, before I start, I just wanna let you know I’m really not happy. Now I’m not taking a pay cut or anything, but I’m super not happy. I’m unhappy. As a matter of fact, I’m the unhappiest.
But please don’t fire me. Definitely not taking a pay cut. Okay, that’s how we want earnings to start. He said, let me be clear from the beginning, our performance this quarter was disappointing and did not meet our expectations. Hey, Mr. Mm, Mm, Mm, all you gotta do is drop your prices, don’t burn your coffee, and stop pushing your political views on us. Type three, if all of you agree, that would probably turn the company around.
All right, stand by. There’s a little bit more coming. And then I got my big story. He said, major headwinds originate from a cautious consumer adding, no, you’re overcharging. A deteriorating economic outlook has weighed on consumer, our customer traffic, and impact felt broadly across the industry. I don’t even wanna go through all these numbers. They’re just depressing. Now Deutsche Bank analyst, Lauren Shiberman, cut Starbucks from a hold or to hold from a buy.
Lauren, you are late to the party. You obviously do not watch the Economic Ninja. And look, I get it. Not everybody’s gotta watch me. Right? I mean, right? It says here, she says, says, says, the challenging results was a sign headwinds are more pervasive and persistent than we expected. And we have limited visibility into the pace and magnitude of recovery. Good news, Lauren. You’re watching the Economic Ninja now.
I’m gonna tell you, this company’s screwed. Because they’ve been pushing their politics too long, forcing people to wear masks, making them feel uncomfortable to overcharge them and make them drink bitter crap coffee. I get it. If you want it to be the same everywhere, you just gotta burn it. And then it tastes like crap everywhere. Equally, I get it. You want consumer consistency. I get it. So now listen, this is what I’m gonna tell you.
I was at a place serving crepes a while back. You know, crepes, those things that the French made. They made a couple of things that are cool. French kiss, French toast and crepes. I don’t know why they didn’t call it French crepes and could have been together. But anyway, my point being is I’m at a crepes place. And it’s a really nice place. And I go into my, hey, you know what? I’d like to get a latte and a cappuccino for the Mrs.
And they said, well, we can’t serve anything but drip coffee. I’m like, what are you talking about? And then my wife goes, okay, I’ll take a decaf coffee. No big deal. Oh, we can’t serve that. What do you mean you can’t serve it? Now the ninja said it nicer because I was like, ooh, these are delightful crepes. I just really want a cup of coffee to go with it.
They said, oh, well see, there’s a Starbucks in this mall. And Starbucks, because they’re so big and important, they push their way around with these malls and say, if you want us as an anchor because we’re gonna be a highlight to your customer’s stuff. You know, like, let’s see, there’s a Bobby Page’s Cleaners here. There’s a FedEx office. There’s an O’Reilly’s Auto Parts. And there’s a, ooh, a cupcake place.
And then there’s like America’s Tire, America. And they go, you know, Starbucks goes in and goes, if you want us here, we’re gonna bring people in to go to Bobby Page’s Cleaners. And they’re like, oh, I was gonna go to the other cleaner, but because there’s a Starbucks here, I’m definitely going to Bobby Page’s. And so what they do is they say nobody within a certain radius, and I believe it’s 400 feet, is allowed to serve anything at any of these restaurants except for drip coffee.
And they probably put in the contract, we wanna make sure it’s ultra crap like Folgers. So it’s, you know, at least on par with their Starbucks. And so they can’t even serve like a latte, a cappuccino with these amazing crepes. Because of these guys, they don’t even have a real sign up, but yet they’re dictating to all these other stores. What’s this one right here? That’s a Del Taco.
Well, you don’t really go there for coffee, but you see my point. They’re pushing their way around. And I gotta be honest with you, Ninja doesn’t like bullies. And I’m getting pretty excited that this company right now is about to experience the greatest stock crash since the dot com era. I just love cycles, don’t you? Look, I’m getting ready for this one. I hope you guys are too.
Do me a favor, hashtag Starbucks. And you can say whatever you want behind it, but then also hashtag your favorite coffee joint, whether it be your mom and pop joint, which I love more than anything, or your favorite chain like Pete’s or like Dutch Brothers. They’re crushing it, it’s cause they’re Dutch. But you know, I’m just saying, coffee racist. I’m just, actually I’m not a big fan of Dutch Brothers, just like their name.
But I just think that it’s really exciting to watch the big boys are crumbling down. I guess the flash mob must have stolen their sign. Hope you guys got something out of this. Thank you so much for watching the Economic Ninja. Oh, wait, stop, stop, wait. I got a newsletter out. There’s not too much to it, but it is free. And it does bring you the basics every day of what I’m covering.
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