Starbucks is one of the great American growth stories of the last 25-50 years. That story is starting to slow, and Seeking Alpha author Atlas Research argues that the stock is a short as management denies the reality. We break down the author's argument and whether the story - declining traffic, management mis-incentives, increasing competition - checks out, and if so, what that means for the stock.
Topics covered:
3:45 minute mark - The end of a great growth story 9:15 - Analyzing the traffic metric for Starbucks and restaurants at large 15:45 - Where did Starbucks' operating leverage go, and the management transition 21:15 - The power of Starbucks' brand and the stickiness of coffee in our lives 30:00 - Breaking apart the Non-GAAP adjustments and management incentives - is management aligned with shareholders? 38:00 - International as the next (last?) leg of the growth story for Starbucks 42:00 - There's a massive buyback - what's going on? 50:00 - Thoughts on Bill Ackman's long position