Starbucks, boom or bust?? Message Board

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Non-Tech : Starbucks, boom or bust??

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To: Laura Marie Ibsen who wrote (2)	11/17/1996 8:12:00 PM
From: Robert Lawkins	of 11

Laura, Go to the other SBUX thread and search the archives. What Ben is saying is correct. There are several postings on why SBUX is a pyramid scheme. All I know is that the company has a ROE of 10% and margins of < 7%. Just do some basic arithmetic and you figure that the company would need to have about 10,000 stores for it to be reasonably priced. The big problem is that they can not generate the capital internally to open these stores and return to the market periodically issuing new shares at very lofty levels. This will always keep the valuation at ridiculous levels and in reality the company never really grows. Do your own research and tell us what you find out. I've been waiting for someone to tell me why these coffee shops are valued between $2-3 million each. Good luck

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