Global political tensions are negatively affecting Seattle-based Starbucks Corporation as the company has lost approximately USD 11 billion in value, which accounts for 9.4 per cent of its total value.
In just 19 days, since the 16 November Red Cup Day promotion, Starbucks shares have plunged 8.96 per cent, causing a loss of nearly USD 11 billion. This was due to analysts’ reports of slowing sales and a poor reaction to the holiday season’s offerings.
The boycotts against the Seattle-based chain are rooted in sensitive geopolitical issues. Starbucks Workers United, the union representing many of its baristas, expressed solidarity with Palestinians in a tweet which led to a lot of backlash.
“Amid an ongoing boycott due to the Israeli occupation’s aggression against the Gaza strip, the undercurrent of discontent signals a challenging brew for the company’s future,” an industry analyst said.
Starbucks stocks declined for 12 consecutive stock market sessions, which is the longest such streak since the company went public in 1992. The stock is currently trading at around USD 95.80 per share, down from its yearly high of USD 115.
The company has denied any wrongdoing but faces the challenge of maintaining its brand reputation amid divisive global issues.
In a recent call with analysts, Starbucks CEO Laxman Narasimhan expressed his optimism about the company’s diversified channels and its ability to engage customers despite macroeconomic challenges and changing consumer behaviours.
The recent boycott of Starbucks is part of a wider boycott of several global brands over their support for Israel. Starbucks in Egypt reportedly laid off workers in late November after being financially affected by the boycott, forcing it to cut expenses.
