Starbucks Stock Rises Despite Zohran Mamdani’s Boycott
New York City Mayor Zohran Mamdani has initiated a boycott against Starbucks, placing the coffee chain in an unusual spotlight just weeks into his administration. Mamdani emphasized that he would not purchase from Starbucks until a fair contract agreement is reached for its striking workers.
Starbucks Stock Performance Amidst Boycott
Despite the boycott call, Starbucks (SBUX) shares rose marginally during Monday afternoon trading. Investors appear unfazed by the mayor’s request, indicating confidence in the company’s resilience.
The Labor Dispute
Mamdani’s boycott stems from an ongoing strike involving approximately 1,000 Starbucks employees across 65 locations. This strike accounts for only a tiny fraction of Starbucks’ extensive network of 16,864 stores. However, industry insiders predict the strike could extend to over 500 locations if negotiations do not resume soon.
Impact of Red Cup Day
Interestingly, the boycott coincided with Starbucks’ annual Red Cup Day, a significant sales event for the brand. This year, it has been reported as the biggest sales day ever for Starbucks, highlighting the gap between consumer perception and organized protest.
Strategic Partnerships and Promotions
In an effort to attract customers, Starbucks has formed a partnership with retail giant Target (TGT). Selected Starbucks locations within Target stores will feature a holiday special, the Frozen Peppermint Hot Chocolate, marking the first time such a holiday drink will be offered in that setting.
Consumer Behavior During Economic Uncertainty
As consumers tighten their budgets, unique in-store offers may entice them back into shopping environments, potentially benefiting both Starbucks and Target.
Analyst Recommendations for Starbucks Stock
Turning to Wall Street for insights, analysts have expressed a Moderate Buy consensus for SBUX stock. This perspective is supported by 12 Buy ratings, seven Hold ratings, and two Sell ratings issued in the past three months.
Despite a 15.56% decline in share price over the past year, the average target price for SBUX stands at $95 per share, suggesting an 11.4% upside potential. Investors will likely continue to monitor the ongoing labor situation and its impact on future stock performance.
