SBUX was a great brand. But now they acted foolishly and struck their own foot with an axe. If Versimo is a hit, customers will not go to stores. But if it is a flop, many customers would actually substitute other brewers like Vue/nespresso or Rivo. Eitherway they lose. Another important issue is SBUX is investing on china expansion, which is not a good idea IMHO. Reason.. China and US already have a trade war going on. Much openly expressed by the republicans. Many other industries like solar and auto and appliances are already evident and will only become worse. Chinese per capita income is also less compared to the price of coffee in China and they are a big Tea fan. I would stay away from this stock or hedge accordingly.
BTW, i am long GMCR. I had SBUX Nov options which i did sell for a huge loss.
My personal opinion is that people who want to save money dont go to starbux or any restaraunt and those who want convenience already had it previously thus Verismo customers are not starbux store customers anyway. Since startbux began people keep making the mistake of thinking that its all about the coffee. It is not. At least 50% if not closer to 75% of sbux clients are not there because of coffee but rather because of social atmosphere. Sbux attracts several types of people, those who want a relaxing hang-out with friends, students who just want a quiet study, business people who want to get out of the office and relax a bit or maybe meet a client in an informal setting, people who hate alcohol and bars and want some other place to hang out, etc. None of these people are there for coffee specifically. They buy the coffee in order to hang out there. This is why other brands are not able to compete and why I think you are wrong in your analysis. Sbux is a venue service provider wrapped in a restaurant package. Verismo will have near 0 affect on their restaurant business.
Now ask me whether or not I think they continue their hot growth and I would have to pause. I am not sure which is why I have not bought in. Keeping a close eye on this, INTC, and a few mREITs.
Are you nuts?? Have you even been to China? I've lived and worked in China on two different stints, in Chongqing, Shanghai and Jinan. I have pictures of lines 2 blocks long where CHINESE people waited to get into Starbucks. The Chinese (as well as India) love WESTERN brands. Doesn't matter if it's KFC, Starbucks, Pizza Hut or whatever..they want it and they buy it. Ha! I laughed like hell when I read your response about Starbucks in China. Starbucks is huge in Asia (there has to be at leat 2 Starbucks on every corner in Bangkok) and every Starbucks in China that I've been to, has been crowded with CHINESE people, to the extent you cannot find a place to sit. The other thing is that, unlike the US where Starbucks provides free WiFi (and a huge mistake in my opinion because people use a Starbucks or book store in the US as their personal offices), in China and the rest of Asia, Starbucks charges for WiFi in their stores. I am long Starbucks. Great brand and great coffee and very innovative.
I think you were foolish to give up so easy. I bought puts just before they came out with Versimo and thought I was going to lose it all. Sure enough a few weeks later I would have made money. The Technicals were telling me this was going to fall. With Nov Calls almost a month away it can change from week to week. I was up before yesterday but I will wait. It will come back plus there is earnings a few weeks away.