We may be staring down a considerable downside in Starbucks’ share price — and I suspect the decline could be severe. When a genuine recession hits — not the softened, cosmetically massaged versions we've seen bandied about — discretionary spending is the first casualty. And let us be honest: a $7 small latte, regardless of its oat milk or seasonal syrup, is the very definition of discretionary.
Inflation over the past four years has not been a natural occurrence. It is the predictable consequence of reckless fiscal policies and excessive monetary accommodation — in plain English, wasteful government spending and money printing. These policies have inflated prices across the board, and coffee is no exception.
What is perhaps underappreciated by most analysts is the brewing effect of tariffs. Come September, we will begin to see the real impact of trade friction on coffee imports from major producers such as Brazil and Colombia. Coffee futures already hit all-time highs in February. Although prices have since pulled back, I view that retreat not as relief, but as the first ominous sign that something is amiss.
Starbucks operates globally, but its margins are still vulnerable to supply chain shocks and input cost inflation. As the economic pain spreads, we should expect average consumers — not just in the US, but in Europe, Asia, and elsewhere — to make different decisions. The morning coffee ritual may remain, but the $7 takeaway will be replaced by home-brewed alternatives and budget-conscious behaviour.
I foresee the possibility of a bear flag pattern luring investors back in with a short-term rally — a classic trap, falsely interpreted as recovery. But please, do not be fooled by this. I believe Starbucks stock could drop sharply later this year, with a potential downside target around $57.80.
This will not be a gentle correction. I expect it to be brutal — marked by layoffs, store closures, and perhaps a reckoning of Starbucks’ business model itself, which is built upon the illusion of small luxuries being affordable in all seasons.
For the rational investor, this is not a time for sentiment or brand loyalty. It is a time for analysis, discipline, and preparation.
This is not investment advice. Do your own research. I could be wrong.
Inflation over the past four years has not been a natural occurrence. It is the predictable consequence of reckless fiscal policies and excessive monetary accommodation — in plain English, wasteful government spending and money printing. These policies have inflated prices across the board, and coffee is no exception.
What is perhaps underappreciated by most analysts is the brewing effect of tariffs. Come September, we will begin to see the real impact of trade friction on coffee imports from major producers such as Brazil and Colombia. Coffee futures already hit all-time highs in February. Although prices have since pulled back, I view that retreat not as relief, but as the first ominous sign that something is amiss.
Starbucks operates globally, but its margins are still vulnerable to supply chain shocks and input cost inflation. As the economic pain spreads, we should expect average consumers — not just in the US, but in Europe, Asia, and elsewhere — to make different decisions. The morning coffee ritual may remain, but the $7 takeaway will be replaced by home-brewed alternatives and budget-conscious behaviour.
I foresee the possibility of a bear flag pattern luring investors back in with a short-term rally — a classic trap, falsely interpreted as recovery. But please, do not be fooled by this. I believe Starbucks stock could drop sharply later this year, with a potential downside target around $57.80.
This will not be a gentle correction. I expect it to be brutal — marked by layoffs, store closures, and perhaps a reckoning of Starbucks’ business model itself, which is built upon the illusion of small luxuries being affordable in all seasons.
For the rational investor, this is not a time for sentiment or brand loyalty. It is a time for analysis, discipline, and preparation.
This is not investment advice. Do your own research. I could be wrong.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.