Starbucks (SBUX) | News Based Sentiment Analysis

• On September 7-9, 2025, Starbucks reported Q3 revenue of $9.46 billion, a 3.8% increase year-over-year, beating expectations of $9.31 billion. However, earnings per share came in at $0.50, falling short of the $0.64 consensus estimate, signaling potential challenges despite revenue growth. This disconnect caused some initial stock dip, highlighting investor sensitivity to profitability.
• Despite the earnings miss, Starbucks continues to focus on innovation, launching Protein Cold Foam and Protein Lattes across U.S. and Canadian stores starting September 29, 2025, aiming to capture the growing demand for protein-rich options. A grande Protein Latte will deliver between 27 and 36 grams of protein, and the Protein Cold Foam adds 19-26 grams.
• Starbucks is actively exploring strategic alternatives for its China operations, with bidders submitting offers valuing the business at up to $5 billion as of September 5, 2025. This potential sale, valued at approximately 10 times expected 2025 EBITDA, could significantly reshape Starbucks’ international portfolio.
• U.S. tariffs on Switzerland, imposed on August 7th, are creating headwinds for Starbucks’ supply chain, impacting Thermoplan, a key supplier of coffee machines. These 39% tariffs are costing Thermoplan around 200,000 Swiss francs ($250,000) weekly, and Starbucks is working with suppliers to mitigate disruptions.
• Institutional investors have been adjusting their positions in Starbucks, with UniSuper Management Pty Ltd increasing its stake by 1.0% in Q1 2025, holding approximately 388,802 shares valued at $38.14 million as of September 9, 2025. This suggests continued institutional confidence despite recent volatility.
• Starbucks announced a quarterly dividend of $0.61 per share on August 29, 2025, with an annualized yield of 2.9%, but the dividend payout ratio is high at 105.17%, meaning the company is paying out more in dividends than it is earning.

The Investment Story: Starbucks is navigating a complex landscape of mixed earnings results, strategic repositioning in China, and external pressures like tariffs, while continuing to innovate with new product offerings. The company is balancing cost management with long-term growth initiatives.

What It Means for Investors: The Q3 earnings report highlighted a disconnect between revenue and profitability, raising concerns about margin compression. The potential sale of the China stake and tariff impacts add uncertainty, but the new protein menu and institutional investment suggest some underlying strength.

Looking Ahead: Investors should closely monitor the progress of the China stake sale, the impact of the tariffs on supply chain costs, and the performance of the new protein-focused menu items. The holiday season sales will be a crucial indicator of demand recovery.

The Bottom Line: Starbucks faces near-term challenges, but its strategic initiatives and continued innovation offer potential for long-term value. Investors should approach with cautious optimism, closely tracking the company’s progress in addressing these headwinds and capitalizing on emerging opportunities.