Starbucks reported same-store sales growth for the fourth consecutive quarter. Investors reacted by purchasing shares at higher prices than they sold them for previously. This is the mechanism by which stock prices increase.
CEO Brian Niccol continues to execute what analysts are calling a turnaround. The turnaround consists of selling coffee to customers who want coffee. Revolutionary stuff. The company raised its full-year outlook, which is a fancy way of saying they now believe they will make more money this year than they previously believed they would make this year.
Retail traders saw the headline and immediately began Googling "what does same-store sales mean." They found an Investopedia article. They read three sentences. They bought calls.
The technical picture remains unchanged. The daily chart shows a series of candlesticks arranged in various colors and heights. The 50-day moving average continues to move. Volume occurred. None of this information tells you whether the stock will go up or down tomorrow, but seventeen people with verified Twitter accounts will pretend it does.
Somewhere in Ohio, a man named Derek just opened a position based entirely on this headline. He risked $3,000 he cannot afford to lose. He did not read the earnings report. He does not know what EBITDA stands for. He knows Brian Niccol used to run Chipotle, and he f*cking loves Chipotle, so this feels right.
The stock jumped because more people wanted to buy it than sell it at the previous price. That is the entire explanation. The news story is set dressing. The same-store sales growth is a reason invented after the fact to explain price movement that would have happened anyway based on order flow and positioning.
Derek's calls expire Friday.
Photo by Athar Khan on Unsplash
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