Any investor who held Starbucks (SBUX) shares last November and still has them today has lost about half of his or her money. SBUX hit $40.01 on November 16, 2006. After a downgrade from RBC today, the stock moved to $20.54.
There is a way to compensate those shareholders for their faith in the company. Give each one of them a free Starbucks charge card worth $20, prepaid by the company. At least the shareholders can go enjoy a beverage. It won’t really cost SBUX $20 because they mark up their drinks and other inventory so much. It might get the people to come back as paid customers, if they enjoy the experience.
The company has a float of 712 million shares, so there would be a one-time charge. Founder Howard Schultz could pass on taking his free cards and save the company some loot.
The RBC downgrade mirrored recent Wall St. reports on the stock. US expansion it too rapid. Same-store sales are being hurt. Commodities prices are moving up. McDonald’s (MCD) is taking premium coffee customers. The "hot" company is not "hot" anymore.
There’s nothing wrong with a little something extra for the poor shareholders. It is the holidays.
Douglas A. McIntyre
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