Starbucks (SBUX) Plunges 5.66% on Disappointing Earnings

Starbucks (SBUX) shares plummeted 5.66%, reaching their lowest level since August 2024, with an intraday decline of 11.02%.

The impact of a new low on SBUX stock price movements over the following weeks and months is expected to vary based on market dynamics and company-specific factors. However, historical patterns and current analyst sentiments provide some insights:
Short-Term Impact (1 Week)
- Historical Perspective: SBUX has shown a mean recovery time of 3 days for closing below its 50-day moving average, indicating a potential price bounce in the immediate term.
- Current Indicators: The stock is trading below its 50-day moving average, which could suggest a bearish trend. However, the recent earnings report revealed weaker-than-expected results, which might prolong the downturn.
Medium-Term Impact (1 Month)
- Historical Perspective: Historically, SBUX has experienced a mean increase of 12.5% over a 30-day period after reaching a new low, suggesting a potential rebound in the medium term.
- Current Indicators: Analysts have adjusted price targets downward, with a consensus price target of $105, indicating a potential upside from the current price. However, the decline in earnings expectations and the weakening consumer environment could cap any potential gains.
Long-Term Impact (3 Months)
- Historical Perspective: SBUX has demonstrated a mean increase of 22.5% over a 90-day period following a new low, indicating a strong potential for price appreciation in the long term.
- Current Indicators: The company is implementing strategic changes, such as focusing on labor-intensive service improvements, which could positively influence the stock price over the longer term if these efforts lead to enhanced customer satisfaction and transaction growth.
In conclusion, while historical data suggests positive price movements following a new low, the current underlying fundamentals and market conditions indicate that the path to recovery may not be linear. The stock's future performance will likely depend on the effectiveness of SBUX's strategic adjustments and the broader economic environment.

Starbucks reported disappointing second-quarter fiscal 2025 results, with earnings and net revenues missing the Zacks Consensus Estimate. The earnings per share (EPS) were 41 cents, missing the estimate of 49 cents, and the bottom line decreased 39.7% year over year. Net revenues of $8.76 billion fell short of the consensus mark and global comparable store sales declined by 1%. The company's operating margin contracted significantly due to deleverage and increased labor costs associated with the "Back to Starbucks" initiative. Additionally, restructuring expenses linked to streamlining the global support organization further pressured margins.

Following these results, Starbucks stock declined 6.4% in after-hours trading, reflecting negative investor sentiment due to the underwhelming earnings performance and expense challenges. Moreover, Moody's Ratings changed Starbucks' outlook from stable to negative, further adding to the negative sentiment around the stock.

Overall, the disappointing earnings and revenue performance, margin contraction, and negative shift in outlook contributed to the decline in Starbucks' stock price at the end of April 2025.