Starbucks is in full focus today following an insider purchase from interim CEO Howard Schultz, who replaced Kevin Johnson on April 4. Year-to-date (YTD), SBUX stock has declined by over 35%, driven largely by decreased foreign demand due to Covid-19.
During the company’s second-quarter earnings call, Starbucks China Chair Belinda Wong had the following to say:
“We expect an even greater impact on our [third-quarter] results due to the timing of the Shanghai lockdown and the further resurgence of the virus in other cities, including Beijing.”
The Shanghai lockdown hasn’t scared Schultz away from buying shares of SBUX, however. Let’s get into the details.
Interim CEO Howard Schultz Buys SBUX Stock
On May 10, Schultz purchased 137,500 shares at average prices ranging between $72.60 and $73.10. In total, the purchase amounted to just under $10 million. That’s no small purchase.
Two days later, Schultz then bought another 72,500 shares at an average price of $68.85. That amounted to $4.9 million.
Both of these purchases are very large and seem to show Schultz’s confidence in the coffee retailer. After the transactions, the interim CEO owns a total of 19.6 million shares, which are worth more than $1.4 billion at current prices.
Schultz has previously served as Starbuck’s CEO from 1986 to 2000 and then again from 2008 to 2017. Much of the company’s success is attributed to his forward-looking vision. As interim CEO, Schultz will pivot toward “setting an innovation framework, while also coaching and onboarding the next permanent CEO of Starbucks.” On stepping back into the executive role, he added:
“When you love something, you have a deep sense of responsibility to help when called […] Although I did not plan to return to Starbucks, I know the company must transform once again to meet a new and exciting future where all of our stakeholders mutually flourish.”
How Do Other Insiders Feel About Starbucks?
In the past 12 months, insiders have purchased 743,509 shares and sold 995,157 shares of SBUX stock. In total, insiders accounted for net activity of 251,648 shares sold. A quick scan of insider transactions in the past year shows that most of the shares bought are attributable to awards of restricted stock units (RSUs).
Insider activity within the past year certainly does not feel like a vote of confidence for the company. Still, under Schultz’s proven leadership, SBUX stock has a fair shot of eventually returning to all-time highs.
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