Market Commentary

China Reopening is Helping Starbucks Stock to Rally

Rahul Joshua · 1 minute read

Starbucks (SBUX:US) shares are enjoying a really good couple of months with the stock up over 50% off its 2022 low set in May. Amid an improvement in the wider risk sentiment that helped stocks recover in recent months, the company is also seen as a beneficiary of the economy reopening in China following strict Covid-19 quarantine rules. 

Starbucks reported earnings earlier this week with both earnings per share and revenue coming in slightly below Wall Street’s estimates. Global comparable sales rose 5%, driven by the strong performance in the United States, where sales increased by 10%. On the other hand, China sales were down 29% as the report covered the period until December 31.

Analysts believe that China can lead a big recovery for Starbucks in the back half of the year. Still, the China recovery story is likely to be bumpy for Starbucks and could take longer than anticipated. On this road, we could see selloffs as the upward move in SBUX stock is mostly based on expectations that China can reignite growth. 

Looking at the Congress members' data, we can see that several Representatives were investing in Starbucks while shares were trading below $90 per share. Congressman Ro Khanna was a regular buyer of the stock, including several transactions on October 6 when SBUX closed at $89.35.

Similarly, Rep. Scott Franklin was buying Starbucks shares in September while his colleagues Josh Gottheimer, John Curtis, and Kathy Manning invested earlier in 2022 in the coffee chain operator.