Starbucks Stock - SBUX - Meltdown With More To Come

Don't let the price of Starbucks stock - SBUX tempt you into buying at this level - there is more selling to come.

Starbucks Stock - SBUX - Weekly Chart

The coffee giant, Starbucks, reported financial earnings a couple of days ago and Starbucks Stock - SBUX - fell off a cliff. Revenues missed by big numbers and earnings were also down significantly. The rationale for the move lower was lower foot traffic - worldwide down 4% year-over-year.

The move downward in Starbucks stock was so pronounced many are likening it to moves that occur during major crises. Starbucks is a company that could be a bellwether of sorts with regard to the economy. If consumers are feeling stretched, the morning Orange Mocha Frappuccino is skipped in favor of home-brewed, freeze-dried alternatives. The consumer is, in fact, stretched since interest rates have been pushed upward as far as they have and the cost of everything is beyond reach. This begs to question if other companies are going to see other, similar moves downward, or are the results isolated?

As it turns out, misery loves company: McDonalds, Yum Brands, Nabisco, and a few other companies are also seeing big drops in foot traffic and this is hurting revenues & profits abroad. But, Starbucks may also have two other major issues that are playing in to the downturn: On a smallish level, the brand response and posturing to the war in the Middle East, as well as the brand capability to connect with consumers during periods of upward price pressures.