Starbucks Corporation Tanks Despite EPS Beat

Starbucks Corporation (SBUX:US), the specialty coffee producer and retailer, reported its Q2 earnings with an EPS beat of 13.8%. Weak guidance however, has sent the stock crashing down 9.17% by close today. The reason for such a negative investor response was mainly weak guidance.

Starbucks’ sales in its second-largest market, China, rose in the quarter. However, the number wasn’t as impressive as the CEO at that time frame, Howard Schultz had predicted. The recovery of the China market is slower than expected. 

With the timely recovery of the Chinese market still a big question mark, despite relaxation in the zero covid policy, investors didn’t look upbeat and sent the stock crashing in today’s trading.

This was the new CEO Laxman Narasimhan’s maiden earnings report after taking over just over a month ago. The company reported $8.7 billion in revenue and an EPS of $0.74, both above Wall Street expectations.

Interestingly, a couple of politicians saw the crash coming. Rep. Scott Franklin sold $50,000 to $100,000 worth of SBUX stock in February this year while Shri Thanedar sold $17,000 to $80,000 worth of shares in January. Starbucks ended today’s trading below the selling price of both these representatives at $103.96.