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Why Starbucks Corporation (SBUX) Rose After Weak Earnings

SBUX – Cramer believes all the bad news in Starbuck’s weak report last week was already priced in.

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.

SBUX currently has a POWR Rating of C (Neutral), and is ranked #18 of 52 stocks in the Restaurants category.

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SBUX at a Glance

SBUX Current POWR Rating™
Overall POWR Rating™
SBUX Current Price $57.81 1.87%
More SBUX Ratings, Data, and News

SBUX Price Reaction

The day of this event (Nov. 6, 2017)
SBUX Closing Price$55.29 0.96%
SBUX Volume11,086,003
14.39% from avg
Leading up to this event
SBUX 1-mo return1.56%
After this event
SBUX 1-day return2.08%
SBUX 3-day return2.32%
SBUX 5-day return1.08%

SBUX Price Chart

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