Starbucks' Market Value Dips By $11 Billion Following Red Cup Day - Here's Why

Starbucks Corporation, headquartered in Seattle, saw significant decline in its market value, losing approximately USD 11 billion in just 19 days following its Red Cup Day promotion on November 16, according to the PTI report. The decline was a 9.4 per cent decrease in the company's overall value. The fall in Starbucks' shares, which dropped 8.96 per cent, is due to slowing sales and a lukewarm response to its holiday season products.
Starbucks

Starbucks (Image Source: iStockphoto, TN Digital)

Starbucks Corporation, headquartered in Seattle, saw significant decline in its market value, losing approximately USD 11 billion in just 19 days following its Red Cup Day promotion on November 16, according to the PTI report. The decline was a 9.4 per cent decrease in the company's overall value. The fall in Starbucks' shares, which dropped 8.96 per cent, is due to slowing sales and a lukewarm response to its holiday season products.
The report added that this downturn in Starbucks' fortunes is linked to deep-rooted boycotts, stemming from geopolitical issues. The company faced backlash following a tweet from Starbucks Workers United, a union representing many of its baristas, showing support for Palestinians amidst the Israeli occupation's actions in the Gaza Strip. This has led to an ongoing boycott and widespread dissatisfaction, presenting significant challenges for Starbucks' future, according to industry analysts.
The report added that Starbucks' stock has seen a record decline for 12 consecutive trading sessions, a first since the company's public listing in 1992, with shares currently trading at around USD 95.80, a decrease from the year's high of USD 115.
While Starbucks has denied any wrongdoing in these matters, it faces the difficult task of upholding its brand reputation amid these divisive global issues.
According to the PTI report, Starbucks CEO Laxman Narasimhan expressed optimism in a recent analyst call about the company's diverse channels and ability to engage customers, despite the macroeconomic challenges and shifts in consumer behavior.
The recent boycotts against Starbucks are part of a broader movement boycotting several global brands over their perceived support for Israel. This has had significant financial repercussions, as seen in Egypt, where Starbucks reportedly had to lay off workers in late November to cut costs due to the boycott's impact.
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