Activist Starboard Value takes stake in Starbucks: WSJ

Activist investor Starboard Value now has a stake in Starbucks (SBUX), according to a report from the Wall Street Journal. Brooke DiPalma joins Asking for a Trend to report more on the story and how Starboard Value could impact Starbucks' trajectory as it struggles with China sales.

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This post was written by Melanie Riehl

Video transcript

Meanwhile, another activist reportedly taken a stake in Starbucks.

Yahoo Finance's Brooke Dipalma is here with the details.

Brooke.

Good afternoon, Josh Wall Street Journal.

Just breaking this story that Starboard value now has a stake in Starbucks.

And it's important to note here, this is now the second activist investor that has been on Starbucks back a few weeks ago.

Elliot investment management also uh had a stake or rather took a stake in Starbucks.

And really what we know here is that Starboard Value does or recently secured board seats at Outback Steakhouse parent company, Bloomin brands.

In addition to that, the company has stakes and match group and is also playing an active role in a potential CEO out at auto desk.

And what we know here is that Starbucks, this is just one of the many struggles that Starbucks has had in its back.

It is facing flagging sales here in the US as well as overseas in China.

Their second largest market.

The journal is saying by the way, the size of the hedge funds stake and its exact demands could not be learned.

But let's say, you know, they start rattling the cages.

What what changes could they possibly propose and ask for?

Yeah, when I spoke to an analyst on the street a few weeks ago, when this news broke about investment management, what they really said here is they're really looking for a new on value perception.

They're really looking to turn around sales in China.

And what we heard on the call from Lakshmi Sim and the CEO there is that they confirm that they are having conversations with, with Elliot Investment Management.

They confirmed that those conversations have moved things forward.

They also announced that they will have potential partnerships in China.

But really investors here are really looking to turn things around here.

They're saying can you franchise China after we sales, you know, decline there, can we reset value perception?

How Starbucks just gotten too expensive?

Do they not have a handle on how expensive that it has become?

Another way is they really want to look to enhance the consumer experience?

We know that they've been facing, you know, operational throughput, they want their service to be faster.

They also want them to make the drinks faster.

And so these are some of the many concerns that Wall Street has that investors have.

And now these two activist investors have and all in the background, you have the former Ceo Howard Schultz three times.

CEO also putting pressure on the new Ceo Lakshmi Nara Simon who took the helm last April.

And so it's been quite a year and all in the background you have that, although lower noise, but there still is some noise.

A lot of those union, a lot of big names and big personalities.

Brooke.

Thank you so much.

Appreciate it.