Starbucks Stock (NASDAQ:SBUX) Slips as Closed Stores Spawn Competitors

Granted, it was a safe bet that coffee giant Starbucks SBUX -1.20% ▼ needed to close stores, and quite a few of them. And the Starbucks battle plan going forward, to focus on in-person operations at all costs, requires it. But it seems like Starbucks is starting to hand competitors the platform from which to cannibalize Starbucks’ own business, as closed Starbucks locations become completely new coffee shops. Starbucks shares fell modestly in Tuesday afternoon’s trading.

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Reports are emerging that suggest that small-scale cafes are increasingly stepping into former Starbucks locations. For instance, Ritual Coffee is coming to the San Francisco Bay Area this October, opening up inside a former Starbucks. The Ritual Coffee location will be the first such location the small outfit has opened in a decade, reports note, and takes advantage of one of the dozens of locations Starbucks abandoned.

Ritual Coffee is hardly alone, either. Wah Coffee will be opening up inside, again, an old Starbucks location in The Loop in Houston. That old Starbucks location was one of the mobile-only locations Starbucks had set aside to fill mobile orders. Now, it will be home to another potential, if very small-scale, competitor.

A Controversial Offering Returns

With the arrival of spring now well within sight, Starbucks is poised to bring back several new drinks. We have heard about some of these already, but one in particular is facing a bit of a mixed response to news of its return: the lavender line.

Reports suggest that some find that the lavender line “tastes like soap.” Naturally, not everyone feels this way, as lavender has been an ingredient for centuries. Some reports even suggest culinary lavender goes back to the Middle Ages. Thankfully, Starbucks will have plenty of other options on hand for those who think the floral taste is a little too much like housecleaning in their mouths for their taste.

Is Starbucks Stock a Good Buy?

Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 15 Buys, eight Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 13.65% loss in its share price over the past year, the average SBUX price target of $100.59 per share implies 5.07% upside potential.

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