Starbucks stock (NASDAQ:SBUX)
Starbucks stock (NASDAQ:SBUX) surged 25% on Tuesday, marking the coffee giant’s most substantial stock rally to date, driven by significant changes in its leadership. The rally, which added over $20 billion to Starbucks’ market value, was spurred by the departure of the company’s CEO and the hiring of Brian Niccol from Chipotle Mexican Grill Inc. This development highlights Elliott Investment Management’s growing success in its activist investment strategy.
Elliott, led by Paul Singer, has been actively involved in more than 70 companies since 2020. The firm is renowned for acquiring stakes in underperforming companies and pushing for strategic changes to enhance shareholder value. Data compiled by Bloomberg shows that 95% of Elliott’s targets saw immediate share price increases upon news of the investment, with an average one-day return of approximately 6%. Starbucks experienced a nearly 7% rise on the day reports first emerged about Elliott’s stake.
Recent Wins and Strategic Influence
Elliott’s involvement has often led to notable stock performance improvements. For instance, the firm’s campaign at Goodyear Tire & Rubber Co. resulted in a 21% stock surge in May 2023. Elliott’s efforts at Southwest Airlines Co. also drove a 7% increase when the firm disclosed its stake in June, although the stock showed little change on news of the proposed board overhaul.
In addition to Starbucks, other high-profile investments by Elliott include:
- SoftBank: Elliott’s stake led to a boost in SoftBank’s shares in February 2022, with the company undertaking a $4.8 billion buyback following Elliott’s suggestions. However, Elliott’s subsequent reduction of its stake in August 2022 caused a decline in share prices.
- Twitter (now X): Elliott’s investment in early 2020 led to significant board changes and governance reviews, although the firm exited its stake by mid-2022.
- Western Digital: Elliott’s push for a strategic separation and capital infusion led to a strong stock performance, with the company’s shares up 17% year-to-date after a notable 66% gain in 2023.
- Catalent: Shares of Catalent rose over 30% in 2023 following Elliott’s involvement, which included adding new board members and initiating a strategic review.
- Etsy: Despite a 9.1% stock jump in February after Elliott acquired a 13% stake, Etsy’s stock has struggled, down about 35% this year.
- Cubic: Elliott’s stake led to a 30% stock increase and a subsequent buyout offer, which was eventually surpassed by a competing bid.
- Public Storage: Elliott’s stake led to new board appointments and strategic changes, with the firm eventually exiting most of its investment.
Outlook and Strategic Goals
While Elliott has not publicly detailed specific requests for Starbucks, the activist firm views the CEO change as a transformative step for the company. Starbucks is also reportedly in discussions with Elliott about including the activist firm on its board.
Overall, Elliott Investment Management’s track record of influencing company strategy and delivering substantial returns to shareholders continues to strengthen, underscoring the firm’s impact on corporate governance and market performance.
Featured Image: Unsplash
