SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Non-Tech : Starbucks, boom or bust??
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: wmf who wrote (4)11/21/1996 10:02:00 PM
From: Sturgeon   of 11
 
I think you're being way too conservative. First of all you are using a 15 year time frame in your valuation. In 15 years there will surely be many more than 5 billion people on Earth. It will probably be more like 8 or 9 billion. Also, $1 per person seems a bit low to me. You're forgetting that they also sell mugs and other coffee paraphenalia. I think $2 per person would be more reasonable.

And what about Mars? There may once have been life on Mars according to NASA. And there may still be. The odds of coffee-drinking life may be as high as 1 in 2 according to the Starbucks annual report. And don't forget all the other inhabited planets in the universe. Starbucks joint venture with Pepsi is certain to pay dividends in other galaxies. Pepsi is a very well run company with a great brand name.

Of course all this growth must be financed. We all know that Starbucks is not very profitable with a return on equity of about 10%. We know that this low profitability forces the company to sell many millions of shares every year at high prices in order to grow at the rate that shareholders have become accustomed. When all the money in the United States has been mopped up a road trip to China and India can be undertaken. The 2 billion people who live there can be introduced to the miracle of the equity mutual fund. A mysterious commoditiy which always goes up in value by at least 20% per year. Soon enough a tidal wave of money will be flowing into funds and from there into newly issue Starbucks stock.

Other than the deficiences I mention above, your comments are well made. Though I believe your short position has caused you to be unduly pesimistic. Perhaps in future you might try to put more emphasis on the positives in the Starbucks story.

Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News