By Starbucks (SBUX) stock reported poorer-than-expected preliminary fourth-quarter results, thereby showing a revenue decrease of 3% year over year to $9.1 billion and a drop of 24% in the adjusted earnings per share, now standing at $0.80.
Investors’ swift response in the form of a more than 5% fall in premarket trading on Wednesday was caused by the weak numbers and the announcement of Starbucks’ fiscal 2025 guidance suspension as it transitions to former Chipotle (CMG) CEO Brian Niccol.
US same-store stores reported a 6% decrease in sales for the quarter, which is a clear change for Starbucks. A 10% fall in foot traffic and a 4% increase in average ticket size was the indication of the company’s problem in keeping the number of customers.
A recent in-app promotion, which includes its pairing menu giving discounts on coffee and breakfast items, failed to improve the customer engagement level, the company claimed.
Starbucks Reports 14% Sales Drop in China
China, the main driver of the growth of the Starbucks brand, was experiencing a very sharp setback. Same-store sales tumbled by 14% through a 6% retrenchment in visitor numbers and a deflation of 8% in ticket size. Starbucks shared the fact that the poor performance was due to a twofold cause: a “soft macro environment” and competition, thus, reinforcing the barriers to international operations.
Even though there was a quarterly downturn, Starbucks stock had risen 3% year to date and had increased 10% in the last six months, mainly due to the optimism linked to Niccol’s arrival. As the official fourth-quarter and full-year results should release after the market close on October 30, investors will look for any signs of a possible comeback strategy from the new leadership.
Starbucks Stock Chart Analysis
SBUX/USD 15-Minute Chart
Starbucks Corporation (SBUX), through the 15-minute chart, we could see that this stock is moving in the zone of tight range with a certain degree of volatility but without any clear direction. On October 31, the price of Starbucks is $97.35, which saw a very small gain of 0.07%. Recently, the stock has tested resistance around $99, while the support area is found at $93.69.
The sideways move shows that the market participants are still indecisive, with neither the bulls nor the bears being totally in control.
RSI Signals Limited Momentum, Key Levels in Focus
The Relative Strength Index (RSI) now stands at 45.66, which means its position is neutral, with a slight bearish bias. The RSI has stayed below the 50 threshold, without crossing extreme levels, indicating limited momentum. This aligns with the orderly price movement we’ve observed, as the RSI has remained balanced between the 30 and 70 limits without any prolonged overbought or oversold conditions.
In the near term, we can anticipate Starbucks to remain moving in this range, with potential resistance around $98 to $99 and support stabilizing near $93.69.
If the price significantly pushes past the $99 mark, it may pave the way for further gains, while if it falls beneath $93.69, it is a potential indication of a possible longer. However, right now, one should observe volume as a probable earlier signal for a breakout either way.
Is Starbucks finally going to come out of its vicious cycle and become top-notch again? Keep a close eye on the $99 level as well as the $93.69 level. A move in either direction could be the game-changer. Follow us for more updates.
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