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Starbucks Stock Could Reward Aggressive Short Sales

July 17, 2018 / Alan Farley

Starbucks Corporation shares broke long-term support in June after the company lowered 2018 guidance in response to weaker-than-expected same-store sales. Some analysts blamed the shortfall on May's racial incident in Philadelphia, while others wondered if intense competition is finally taking its toll on the international coffee king. In either case, the decline has set up a potential short sale opportunity that could generate healthy profits into the fourth quarter. The company outlined three strategic initiatives to get back on track: returning $25 billion in cash to shareholders through buybacks and dividends, scaling back new store expansion, and closing underperforming urban operations. This should all sound familiar because it's the typical playbook when growth at a major brand starts to decelerate due to maturation, saturation and/or competition.