Investing Update: Why I'm Selling Starbucks
What I'm buying, selling & watching
Make it ten straight days where the Nasdaq was up. It just had it’s best week in nine months. It continued to break new all time highs. If you thought the market was hot before, it’s scorching hot now.
The FANG stocks along with the high multiple growth stocks continue to both run. The S&P 500 has been following right along smashing records all week long.
I’ve had some price targets where I’ve wanted to enter some new stock positions but my price targets just got blown out of the water over the past week. So I’m holding my itch to buy until we see a bit of lag. I have my shopping list set and may trim some existing holdings next week to lock in gains if the market continues to climb.
Peloton Update
In my last investing update I had indicated I was adding to my stake in Peloton (PTON). A number of you have emailed me asking what my thoughts are now and what I’m doing. It had a brutal earnings report on Thursday. No hiding from that and the stock tumbled. The two positives from the call is a growing subscriber base and an extremely low churn rate. When they get customers, they’re extremely sticky.
The concern is that management may be fumbling away the opportunity here. With the weather turning cold in much of the country this next quarter may turn out to be a judging point for the company. It sure seemed like they lumped all the bad news into this one quarter. A traditionally down quarter for them. Wishful thinking? Maybe so. But it’s been done by companies before and wouldn’t surprise me.
I’m still holding onto my shares and not going anywhere. I bought in the low $30s and sold some off in the $160s. Took out my cost basis plus a bit more and have let the rest ride. I’d like to watch it’s price action next week and see where the analysts that cover it move their price targets to. I may consider adding to it. The bottom line is they have a great product that is loved by it’s users. But the stock sure isn’t loved at the moment.
Moves I’m Making
I’ve cut my position in Starbucks (SBUX). Of all my stocks this is my least favorite. I’ve held it for many years. I’ve experienced a return over 200% on it. So it’s done great for me. Can’t complain.
The reason I originally bought it was that it had a great product that I liked. I used to stop daily. As my taste for coffee has advanced and now I’ve experienced what great coffee is, I find myself never going to Starbucks. I actually can’t even drink their coffee now. My wife is the same way. This also goes for my close friends and family who love great coffee. Starbucks coffee just isn’t very good. Their focus is the expensive sugary drinks.
The lines in the morning are still long. But the mid day long lines aren’t there anymore. There is more competition than ever for coffee. I find myself seeking out local coffee shops whenever I go. I find it fun trying new unique spots whenever traveling to a new city. I used to just go to a Starbucks. Now I seek out the local spots. After the pandemic my support for local small businesses has only grown. Especially the restaurants and coffee shops.
Starbucks growth now is entirely tied to China. That was evident in their earnings report last week when it sold off rather hard. They’re also fighting the possibility of baristas unionizing in parts of the country.
The stock doesn’t quite fit what I’m looking for in individual stocks that I own for the long term anymore. So I cut my stake and will maintain a small position moving forward. If I see a better opportunity in another stock this is currently the stock I would sell out of my portfolio.
What I’m Watching
Coinbase (COIN) - The momentum in this stock and the crypto environment just grows and grows. I’ve been spending some time researching and looking into the growth profile of this stock. I had a price target set but like I said above it was left in the dust with some others.
I’ve had a wallet on Coinbase for a while. It’s starting to seem if people want to trade crypto, Coinbase is the platform to do it. All the other apps and options seem to be a distant second. Regardless what coin people feel like trading this platform has it and it’s capturing a lot of interest. People that want to play the Bitcoin and crypto trade, can do this directly by using the Coinbase app to buy Bitcoin and certain coins. Or they can just buy the Coinbase stock.
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Disclaimer: This is not investment advice. You should not treat any opinion expressed as a specific inducement to make a particular purchase, investment or follow a particular strategy, but only as an expression of an opinion.