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Is Fouled-Up Starbucks Promotion Responsible for Stock Price Dive?
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Source: courtesy of Starbucks
That is possible, but ITG’s research does not get wide distribution, and Starbucks’ share volume had almost reached its daily average of 4.2 million before the first hour of trading even finished.
It is also possible that competitors Dunkin’ Brands Group Inc. (NASDAQ: DNKN) and McDonald’s Corp. (NYSE: MCD) are making some big moves. Not the case, as both are trading down, although neither is down as far as Starbucks.
That leaves yesterday’s fouled-up promotion of Starbucks’ $450 gift card from luxury sell Gilt.com. The promotion was supposed to launch last Friday with just 1,000 of the cards available. Starbucks ran a similar promotion last year with 1,500 cards at the majestic price, and it was a huge success. But Gilt posted the promotion a day early and before the website could remove the page, at least some of the cards were sold. Neither Gilt nor Starbucks would say how many were left.
Then the $450 cards started showing up for sale on eBay for up to double the price.
This has been an unmitigated public relations disaster for Starbucks. The customers who would have purchased the cards were among the company’s most well-heeled, and the luxury tag would have made a big splash again this year. Instead, the splash turned into a thud.
On its own, the fiasco probably shouldn’t have amounted to much. After all, only about seven people in the entire world really care about who got one of the cards as a gift and who got passed over by Santa.
But if Starbucks cannot run a decent promotion, can it really be capable of fighting it out with Dunkin’ and McDonald’s and winning? That is probably a stretch, but it’s not impossible.
Starbucks shares were down nearly 3% in the first hour of trading Tuesday, at $77.43 in a 52-week range of $52.39 to $82.50.
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