According to Friday WSJ reports, Elliot Management activist hedge fund took a significant stake in Starbucks (SBUX.US) business, and is now in talks with management board to boost shares performance and valuation, as the company faced problems with coffee chain market and weakening demand.
- After those reports, Starbucks rebounded almost 7%, but today the stock is losing 3% as investors await some constructive and maybe actualized pricing policy from the leading, global coffee store. Starbucks same-store sales falling 3% YoY in the US market, with traffic dropping 7%; in Q2, company cut its full-year outlook
- Elliot did hold a Starbucks shares before March 31, and it is still unknown how much of it was bought by an investment firm. Markets speculate about a possible successful CEO Schultz comeback, despite his comments suggesting not plan to come back for 'a fourth stint'.
Starbucks (SBUX.US), D1 interval chart
Looking at Starbucks (SBUX.US) chart, on a daily interval we can see that price is fluctuating between 61.8 and 71.6 Fibonacci retracement of the 2020 rising wave ($72 - $80). Stock price dropped after reaching $80 resistance, where we can see not only Fibo level but SMA50 (yellow line). The long term resistance zone is now placed near $90, where we can see SMA200 (red line). We can see also a potential, bearish 'head and shoulders' pattern which can signal further distribution if stock price drop below $72 level.
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Source: xStation5
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