• Research


  1. RESEARCH

  2. For access to the research report, please fill in your details below

Feb 7, 2019

S3 Analytics: Starbucks: Shorts are in, Baristas & Democrats are out

The former CEO of Starbucks Corp, Howard Schultz, declared the possibility of a presidential run as an Independent in a recent 60 Minutes interview which drew the ire of Democrats who fear he would cannibalize votes from their ticket. Schultz was recently heckled at a New York City book event; coffee drinkers began threatening to boycott Starbucks and baristas are considering taking off their aprons, putting down their tamps and walking away from their steam wands. But even with all this commotion, SBUX stock managed to gain 1.14% over the last week.

While coffee drinkers and baristas contemplated their future actions, short sellers acted quickly with SBUX shares shorted increasing by 2.5 million shares, +6.78%, over the last week. SBUX short interest is now $2.7 billion; 39.21 million shares shorted; 3.26% of the float with a 30 bp fee stock borrow cost.


SBUX continues to be most shorted stock in the Restaurant Sector and had the largest increase in short interest in the sector over the last week and made up almost half the total increase of short interest in the sector. Shorting the Restaurant Sector has not been a profitable endeavor in 2019, the $12.7 billion worth of shorts are down $1.02 billion, -8.28%, in mark-to-market losses year-to-date with SBUX short sellers the second most unprofitable short behind Chipotle Mexican Grill Inc (CMG) with $167 million of mark-to-market losses this year.

We are seeing continued active short selling activity today in response to the Schultz announcement, but short sellers have more fundamental reasons to hold onto or increase their positions. Specifically, same store sales growth has been lagging and the enormous size of the company and number of stores coupled with maturation and saturation of the product makes exceeding analysts’ growth and revenue targets a difficult task. Increased stock buybacks and dividend growth are an attractive carrot for long shareholders, but unless international growth kicks into high gear Starbuck’s valuation relative to its sector brethren may seem like paying Venti prices for a Grande product.

Want deeper insight into the above analysis?
Contact:  Ihor.Dusaniwsky@S3Partners.net
                 Managing Director Predictive Analytics, S3 Partners, LLC

For more information on S3’s reporting, data and analytics solutions, email us at sales@s3partners.net . Start your free trial of the BLACK App – the only source of real-time short interest on the Bloomberg Terminal or Thomson Reuters Eikon.
For short side data and access to our research reports go to https://shortsight.com/
The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC ('S3 Partners') to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks and merits, as well as the legal, tax, accounting and investment consequences, of such decision.


To learn more about S3 Short Interest data, BLACKLIGHT Treasury Management, and Counterparty Risk Solutions, click here

To trial the S3 BLACK APP – the Definitive Source of Real-Time Short Interest - type APPS BLACK <GO> on the Bloomberg terminal

The BLACK APP is now available on Thomson Reuters Eikon! For a free trial, go to the App Library and open the App Studio