When Zohran Mamdani got elected mayor of New York City, many feared there would be fallout in the business community. Little did coffee giant Starbucks (SBUX) suspect that it would find itself on that firing line just two weeks into the Mamdani administration. Mamdani called for a boycott, but investors were not interested, sending Starbucks shares up fractionally in Monday afternoon’s trading.
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Mamdani was very on-message, noting, “Starbucks workers across the country are on an Unfair Labor Practices strike, fighting for a fair contract. While workers are on strike, I won’t be buying any Starbucks, and I’m asking you to join us.” The strike was very narrow in scope, limited to about 1,000 workers across 65 stores, which is the barest fraction of Starbucks’ 16,864 stores. But reports suggest it could expand to over 500 stores if the negotiations do not restart.
Despite a strike in the midst of Red Cup Day, Starbucks reps revealed that this year’s event was “…the biggest sales day ever for the company.” So even as the Democratic socialist called on customers to boycott Starbucks, the calls fell mostly on deaf ears.
The Target Connection
Meanwhile, Starbucks looked to augment its position among the customers who are not following Mamdani’s lead, by getting together with retail giant Target (TGT) to do so. The Starbucks locations inside Target stores are poised to offer a holiday special, the Frozen Peppermint Hot Chocolate.
A surprisingly large percentage of Target stores contain a Starbucks, much in the same way that K-Mart stores had Little Caesars locations in them. But this is actually the first time that Starbucks has offered a holiday drink through those in-store locations, which may help perk up both sides’ sales. Customers are increasingly watching their spending, but may be lured back into stores with a tasty beverage that can only be found therein.
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 12 Buys, seven Holds and two Sells assigned in the past three months, as indicated by the graphic below. After a 15.56% loss in its share price over the past year, the average SBUX price target of $95 per share implies 11.4% upside potential.
