Starbucks Loses $11B: Impact of Pro-Palestinian Boycotts?
In the midst of intense union clashes and a turbulent stock market, Starbucks finds itself in the eye of a storm, shedding a staggering $11 billion in market value over a brief fortnight. The catalyst? A cascade of events triggered by the company's response to a union's pro-Palestinian social media stance.
The origins of this financial tempest can be traced back to October 7 when Starbucks, already under scrutiny for alleged union-busting, faced a fresh wave of backlash.
While economic factors typically sway market values, the impact of boycotts cannot be dismissed. Boston University's Professor Keith Hylton, an expert in law and economics, highlights the potential influence of the pro-Palestinian boycotts that gained momentum in mid-October. Starbucks' market value declined for 12 consecutive days, culminating in an $11 billion loss, accounting for roughly 10% of its total market value.
Hylton characterizes this decline as an unusual projection of Starbucks' future value, emphasizing the atypical nature of the situation. The company's legal tussle with Workers United, the union organizing its workers, added fuel to the fire. Starbucks' reputation took a hit, with international accusations linking it to the Israel-Hamas conflict.
In response to the outcry, the hashtag #boycottstarbucks flooded social media, intensifying the impact. Edgar Dworsky, a consumer advocate, notes that even less-organized boycotts can be remarkably effective, especially when they resonate with individual consumers.
Boycotts, according to Hylton, wield significant power over a company's value. The widespread reach of the Starbucks boycott, fueled by international connections to a cause, further contributed to the company's dwindling market standing.
As Starbucks grapples with this unprecedented challenge, the future remains uncertain. Dworsky suggests that winning back customers may prove a formidable task. The company's stock has undeniably taken a substantial hit, prompting contemplation on its path forward in the wake of this financial storm.