Starbucks shares continue to fall after big earnings miss

Starbucks’ Stock Plunges After Earnings Miss

Starbucks faced a tough day on Wall Street as its stock price took a nosedive following a big earnings miss on Tuesday. The company’s shares continued to fall on Wednesday, closing down nearly 16% as investors reacted to disappointing financial results.

One of the key issues that spooked investors was a decline in Starbucks’ U.S. same-store sales. The company attributed part of this decline to a curious phenomenon dubbed the “Yogi-ism”: “Nobody goes there anymore, it’s too crowded.” This suggests that Starbucks may be facing challenges in managing its peak morning period, which accounts for a significant portion of its business.

CEO Laxman Narasimhan highlighted that while Starbucks is “coffee forward” and has become a daily routine for many customers, the company is facing hurdles in converting app orders into completed purchases. Narasimhan noted that a high percentage of customers are abandoning their orders due to long wait times or product unavailability.

In addition to operational challenges, Starbucks is also grappling with supply chain issues and increased competition in key markets like China. The company cut its sales outlook for the second time this year, reflecting the tough road ahead.

As Starbucks works to address these challenges and regain investor confidence, the stock market will be closely watching how the coffee giant navigates these headwinds in the coming months.