When Brian Niccol was brought in to serve as CEO of coffee giant Starbucks (SBUX) back in September of 2024, there were high hopes that he could do for the ailing coffee brand what he did for Chipotle Mexican Grill (CMG). But new reports suggest that, a year and a half into his tenure, lightning has failed to strike twice. The notion is hurting investors hard, and shares were down nearly 5% in Friday’s trading.
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The move to hire Niccol was a huge move at the time. In fact, reports note, the day the hiring was announced, Starbucks stock gained 20% in a matter of minutes, giving Starbucks its biggest one-day gain ever at the time. But the buzz has died down, and what is left is a giant plan for “third-place” aspirations that does not seem to be working well.
Reports note that only “tepid signs” exist that Niccol’s extensive modification of Starbucks is actually working. Bernstein analyst Danilo Gargiulo with Bernstein noted, “For me, the real surprise has been the amount of time and effort and investment needed to operationally clean up Starbucks.”
Trouble for Baristas
A list recently emerged that compiled some of the worst behavior seen at a Starbucks, which also underscores the task that baristas have to undertake on a regular basis. It also serves to demonstrate why the state of civility in the world today might complicate efforts to establish Starbucks as a “third place” once more.
The list included terrifying rages over misspelled names on cups, and one in particular was especially frightening as “Sarah” had been spelled “Sara” instead. Another featured a series of modifications so long that the receipt was nearly the size of the drink cup. And then, there was footage of the fallout from the Bearista cup, which led to accusations of pilferage and arguments. All of this together poses serious problems for those who make the drinks happen, and the chain that offers them.
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 13 Buys, 11 Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 6.66% loss in its share price over the past year, the average SBUX price target of $101 per share implies 15.71% upside potential.
