The price action in Starbucks Corporation (NASDAQ:SBUX) on Friday probably confused many investors.
After a weaker than expected earnings report after the bell on Thursday, the coffee giant’s shares plunged in aftermarket trading. They even opened up significantly lower on Friday, before surging 4% from their lows to finish firmly in the black on the day.
Venerable market pundit Jim Cramer explained on CNBC why the bad news was probably already priced in:
In Starbucks’ case, most of its larger shareholders saw the growth rate cut as “a given,” Cramer said. Smaller investors who weren’t expecting the guidedown sold the stock on Thursday, but buyers who expected it bought into Starbucks on Friday morning, erasing its losses.
The stock soared further after Starbucks CEO Kevin Johnson’s interview on CNBC’s “Squawk on the Street,” in which he talked about the company’s 20 percent dividend increase, share buyback program, mobile pay improvements and accelerating growth in China.
Even though SBUX is still significantly off its yearly highs, the stock has now bounced over 10% from its 52-week low. That’s a positive development for the stock, even if the underlying company is still struggling to return to significant growth.
Starbucks Corporation shares were unchanged in premarket trading Monday. Year-to-date, SBUX has gained 2.25%, versus a 17.14% rise in the benchmark S&P 500 index during the same period.
Try StockNews.com Premium Today!
Get access to our daily newsletters, Best Stocks List, POWR Ratings, and much more!
Free for 14 days -- no credit card required!