What Happened?
Shares of coffeehouse chain Starbucks (NASDAQ:SBUX) jumped 6.8% in the morning session after the company reported impressive fourth-quarter (FQ1 2025) results. Same-store sales outperformed Wall Street's estimates, leading to beats on the revenue and EPS lines. However, this is the fourth straight quarter of negative same-store sales, and new CEO Brian Niccol is trying to turn around the business with his "Back to Starbucks" strategy. Zooming out, we think this was still a solid quarter despite another negative same-store sales print.
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What The Market Is Telling Us
Starbucks’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock gained 23.4% on the news that the company announced that CEO and Director Laxman Narasimhan is stepping down effective immediately. Brian Niccol, the CEO of Chipotle, will replace him.
During Niccol's time at Chipotle, revenue nearly doubled, profits increased nearly sevenfold, and CMG's stock price increased by nearly 800%. Niccol's industry experience includes multiple leadership roles at Taco Bell before he became CEO of the company. He has also held executive roles at Pizza Hut, another division of Yum! The market's reaction to the news suggests investors are positive about the prospect of the business under a new leadership following the recent quarters of earnings underperformance.
Starbucks is up 17.6% since the beginning of the year, and at $108.35 per share, has set a new 52-week high. Investors who bought $1,000 worth of Starbucks’s shares 5 years ago would now be looking at an investment worth $1,249.
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