Starbucks Stock

Starbucks Stock:Starbucks CEO fired after sales decline due to boycott of Israel

Starbucks Stock

Less than two years into the job, the CEO of Starbucks was fired due to declining sales and boycotts by customers over Israel.

Laxman Narasimhan resigned with immediate effect on Tuesday, and the international coffee chain announced his exit.

Brian Niccol, the former Chipotle CEO who is recognized for having revived the Mexican restaurant chain’s business, has taken over for him.

Following a challenging year for Starbucks, there has been a shift in leadership. Sales declined for two straight quarters, falling 3% in the next three months after a 4% decline in the first three months of the year.

Due to the chain’s purported ties to Israel, some customers have cut back on their purchase of the pricey coffee, while others have boycotted the company.

Elliott, an activist investor who has amassed a stake in the company, has taken notice of this and has increased pressure on the board.

After losing around 25% of its value over the previous 12 months, Starbucks’ stock gained about 20% on Tuesday following the announcement of Mr. Narasimhan’s departure.

Due to the company’s alleged backing of Israel during the Gaza crisis, a boycott of it has been in effect for the past year.

After it filed a lawsuit in Iowa for trademark infringement against the Starbucks Workers United (SWU) union, tensions increased. This was in reaction to the union posting on social media that it was in “solidarity with Palestine” after Hamas militants attacked on October 7.

The Middle Eastern franchisee of the corporation declared in March that it was going to lay off thousands of workers due to a decline in sales that was attributed to boycotts related to the Gaza War.

The corporation has consistently maintained that it has never donated money to the Israeli government or military and that any claims of its support for Israel are the result of false information found online.

The departing Mr. Narasimhan ran the massive consumer products company Reckitt, which owned Durex, before taking over as CEO of Starbucks in March 2023.

Midway through a three-year turnaround project, he resigned from Reckitt.

On September 9, Mr. Niccol will take over as CEO of Starbucks; in the interim, Rachel Ruggeri, the CFO, will lead the organization.

Cathie Wood purchases sinking major tech stock for $2.4 million.

 

The opinions of the investing community on Wood, who is arguably the most well-known investor in the nation after Warren Buffett, are divided. Critics claim she’s just a mediocre money manager, while admirers hail her as a technological visionary.

Wood, known to her fans as “Mama Cathie,” gained widespread recognition with a stunning 153% return in 2020 and her precise explanations of her investment approach in numerous interviews.

However, her performance over the long haul isn’t that great. With $5.2 billion in assets, Wood’s flagship Ark Innovation ETF (ARKK) has generated negative annualized returns of 8% over the last 12 months, 30% over the last three years, and 1% over the last five years.

That is insignificant in comparison to the S&P 500. For one year, three years, and five years, the index had positive annualized returns of 21%, 8%, and 15%, respectively. Additionally, Ark Innovation’s results are well short of Wood’s target of at least 15% yearly returns across five-year intervals.

Cathie Wood’s simple approach

Her approach to investing is really simple. Typically, Ark ETFs invest in e-commerce equities that are part of the high-tech industries, such as robots, blockchain, artificial intelligence, DNA sequencing, and energy storage.

According to Wood, businesses in those areas are going to revolutionize the game. The valuations of the Ark funds frequently change greatly because these stocks are, of course, highly volatile.

stalwart of investment research Wood and Ark Innovation ETF is not a big fan of Morningstar. In March, Morningstar analyst Robby Greengold stated that investing in early-stage businesses with low profitability “demands forecasting talent, which ARK Investment Management lacks.”

Wood stated that the five high-tech platforms he has outlined above have “compelling” promise. However, the firm’s aptitude for identifying winners and controlling their numerous risks is lacking. It hasn’t demonstrated that the risks are worthwhile.

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