Starbucks’ Redesigns May Not Pull Youth Market, Starbucks Stock (NASDAQ:SBUX) Drops

Coffee giant Starbucks SBUX -2.03% ▼ has been eagerly trying to win back a place in users’ hearts and minds. Specifically, that place is “third place” status, a place people go that is neither work nor home. But there are some distressing signs that one of the biggest markets, the youth market, may simply not care about Starbucks’ plan. That left investors on the back foot, and sent Starbucks shares down nearly 2% in Friday afternoon’s trading.

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We know that Starbucks is spending big money on its renovation plans. And it is also cutting back some of its own revenue generation capability by closing mobile-only stores that were just around to fill orders placed over the app. Starbucks wants customers back in stores in much the same way it wanted its people back in the office.

And that may be the central thread that is most likely to break. The younger crowd has been more actively pursuing the drive-thru alternatives like Dutch Bros. BROS -0.08% ▼ , which makes Starbucks’ increased pursuit of a 90s-style coffeehouse vibe ring a little hollow. In fact, it almost makes Starbucks’ move a double failure; it is actively closing what the Gen Z market demographic seems to want more than what Starbucks is actively piling cash into creating.

Latte Factor Redux

Meanwhile, remember all those finance gurus who swore that people were not getting ahead financially because of the “latte factor”? That the reason people could not get ahead was not because of cripplingly high prices on necessities, but rather, because of tiny indulgences like overpriced coffee? Starbucks is once again coming back as a whipping boy to the youth market, especially the liberal youth.

A Republican candidate for Senate in Minnesota, former NFL reporter Michele Tafoya, declared, “I think right now at least just kind of keeping a stiff upper lip. Maybe you take one less trip to Starbucks and so that gas goes a little further. Until this thing is over and these gas prices go back down again, let’s just try to be patriots about this. Whether you agree with it or not, we’re there and we’ve got to support our men and women in uniform.”

Is Starbucks Stock a Good Buy?

Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 13 Buys, 11 Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 1.28% loss in its share price over the past year, the average SBUX price target of $101 per share implies 7.72% upside potential.

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