Starbucks Plunges 3.5%, Is This the Final Straw for Coffee Giant?

Summary
• Starbucks (SBUX) tumbles 3.5% to $86.04 amid mixed Q3 earnings and strategic shifts
• CEO Brian Niccol discontinues pickup-only store format, signaling operational overhauls
• Sector peers like McDonald’s (MCD) rally 1.03%, highlighting divergent restaurant sector dynamics
• Technical indicators show bearish momentum with RSI at 34.3 and MACD histogram -0.59

Starbucks’ intraday selloff has sparked urgency among investors, with the stock trading 3.5% lower at $86.04. The move follows a Q3 earnings report marked by declining same-store sales and strategic pivots, including the phaseout of pickup-only stores. While the broader restaurant sector shows mixed performance, Starbucks’ shares are under pressure as technical indicators and options data point to short-term bearishness.

Strategic Overhauls and Earnings Disappointment Weigh on Starbucks
Starbucks’ sharp decline stems from a combination of earnings underperformance and strategic shifts. Q3 results revealed a 2% drop in global same-store sales, with U.S. transaction trends lagging despite early signs of recovery in China. CEO Brian Niccol’s decision to discontinue pickup-only stores—once a key innovation—has raised questions about operational efficiency and customer engagement. Additionally, the broader market’s skepticism toward consumer discretionary spending, exacerbated by rising tariffs and inflation, has amplified the sell-off. The stock’s 3.5% drop reflects investor concerns over execution risks in Niccol’s 'Back to Starbucks' initiatives.

Restaurant Sector Mixed as McDonald’s Outperforms
The restaurant sector remains fragmented, with McDonald’s (MCD) rising 1.03% on stronger-than-expected traffic and menu innovation. Starbucks’ struggles contrast with peers like Wingstop and Outback Steakhouse, which have outperformed on value-driven strategies. While the sector grapples with inflation and shifting consumer habits, Starbucks’ pivot to smaller formats and office-centric operations may take time to materialize, leaving it vulnerable to near-term volatility.

Bearish Setup: Put Options and ETFs to Hedge the Selloff
• 200-day MA: $95.32 (well above current price)
• RSI: 34.3 (oversold territory)
• MACD: 0.12 (bearish divergence)
• Bollinger Bands: Lower bound at $90.54 (critical support)

Starbucks’ technical profile suggests a continuation of the bearish trend, with key support at $90.54 and resistance near $97.05. The stock’s 3.5% drop has triggered increased activity in put options, with the SBUX20250808P85 contract standing out. This $85-strike put offers a 94.78% leverage ratio and 0.1007 gamma, making it sensitive to price swings. A 5% downside to $81.74 would yield a payoff of $3.26 per contract, aligning with the bearish bias. Conversely, the SBUX20250808C87 call ($87 strike) is positioned for a rebound, with 76.33% leverage and 0.1076 gamma. If the stock breaks above $90.54, this call could offer a 74.02% return. Investors should monitor the 200-day MA and RSI for confirmation of a trend reversal. For ETF exposure, consider shorting leveraged bear ETFs if available, though none are listed in the provided data.

Backtest Starbucks Stock Performance
Starbucks (SBUX) has historically shown positive short-to-medium-term performance following a -3% intraday plunge. The 3-day win rate is 53.14%, the 10-day win rate is 51.16%, and the 30-day win rate is 54.62%, indicating that the stock tends to rebound over the following days. The maximum return during the backtest period was 2.24%, which occurred on day 58, suggesting that while the rebound is generally positive, it may not always be strong.

Beware the 85-87 Range: Key Levels to Watch Before Rebound or Reversal
Starbucks’ near-term trajectory hinges on its ability to stabilize same-store sales and execute its operational overhaul. Technical indicators and options data suggest a high probability of continued weakness until the stock retests the $85–$87 range. Sector leader McDonald’s (MCD) gaining 1.03% underscores the importance of value-driven strategies, offering a blueprint for Starbucks’ recovery. Investors should prioritize short-term put options like SBUX20250808P85 while keeping a watchlist on the 200-day MA and RSI for bullish divergences. If the stock breaks below $85, the bearish case strengthens; a rebound above $90.54 could signal a short-covering rally. The coming week will be pivotal—watch for earnings follow-through or strategic clarity from management.