Rod, it is my opinion that SBUX is not only investing money from sales of its stock, in its three or four-pronged overseas market expansions, but that it is quite likely to be borrowing money in the process (that is what I meant by leveraging).
Also, even if they were to remain debt-free by not borrowing any money, as long as they keep spending money at a maximum rate by investing it in expansion, the number of new outlets (and new market areas they enter) will enhance the future value of the stock. The more the future value is perceived to be enhanced, the more the stock will be in demand. The more it is in demand, the higher the price goes, enabling SBUX to increase the float of stock more, without depressing the price and thus have more money to expand with.
However, if they choose to use their stock shares as collateral for borrowing money, then the higher the price of the stock goes, the more money they can borrow for expansion. The more they borrow and use to expand, the higher the price goes.
When will the financial facts plus human psychology decide it has gone high enough to never get any higher, God only knows. Could be tomorrow, could be decades from now, with the potential size of the markets it is entering, especially the Asian market.
John |
