One of the first things that followed Katie Wilson’s election to mayor of Seattle was to call for a Starbucks boycott. Coffee giant Starbucks (SBUX) may not have felt especially welcome after a move like that, which might in part explain some of the effort to move to Nashville. It turns out the governor of Washington also got involved with Starbucks’ departure. But either way, Starbucks had a huge day today, with shares up nearly 10% in Wednesday afternoon’s trading.
Claim 55% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
Things did not start off well between Starbucks and Seattle when Katie Wilson was elected mayor. When your first move as mayor, as noted previously, is to immediately call for a boycott of one of the city’s biggest employers, it is probably easy to not feel especially wanted. Then when a new tax agenda kicked up that even its founder is starting to question, things only get muddier from there.
With a high minimum wage, and an increasingly harsh economic climate—mostly driven by politics—facing it, Starbucks started considering other options. A tower in Bellevue was the first stop, reports noted, followed by exploration beyond the state line. And eventually, Nashville—with a combination of “aggressive” employer incentives and zero income tax—proved to be too strong a lure for Seattle to completely break.
Then The Governor Got Involved
But politics stepped in once more, and may have at least ameliorated some of the losses. Bob Ferguson noted that he previously held a “lengthy” conversation with Starbucks brass about its planned move to Tennessee. Ferguson noted that he planned to do what he could, “…in every way possible,” to support Starbucks in Washington.
But it was easy to see why Starbucks decided to move. Ian Courtnage, head of Ethan Stowell Restaurants, noted, “It’s the accumulation of a bunch of well-intentioned policy that has knock-on effects, and it builds over time.” Between policies on wages, delivery platforms, and several others, the impact has hit Starbucks hard. It also likely left Starbucks searching for the kind of relief that only fewer policies can provide.
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 15 Buys, 12 Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 21.52% rally in its share price over the past year, the average SBUX price target of $107.24 per share implies 0.76% upside potential.
