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Stock Brawl on Starbucks (SBUX)

Tuesday, October 4th, 2011

In addition to my stock-brawl interview on Thursday (9/29/11), I have commented to the media on Starbucks (SBUX) many times. Below is a list (with links) to my past opinions/comments on SBUX.

If anything, you can say that I am consistent with my message on SBUX. The last time it was super expensive I said the same thing.

Mar 19, 2008:  CNBC Power Lunch : Starbucks – Just a Coffee Shop
Mar 22, 2007: CNBC: Fast Food Fights: Starbucks vs McDonalds
Mar 20, 2007: Seattle Post-Intelligencer: Starbucks Sorts Investor Complaints Today
Nov 16, 2006: CNBC Street Signs: Latte Overload – Is Starbucks Overvalued?
Nov 6, 2006: Fortune Magazine: A Darker Side of Starbucks

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3 Comments

  1. varadha says:

    Terrific, yet simple analysis. I’ve always been a fan of ROIC as a measure of capital efficiency and believe that no size/growth outperformance can replace the quest for efficiency.

    Sort of like a big gas guzzling v8 that needs ever increasing gallons of fuel to keep its engine running

  2. David says:

    But Angie’s $90 per user acquisition cost is going to go away. That’s what their approach probably is. How would their outlook be if that $90 cost dropped down to a total cost of $3 per user?

  3. David:

    That would be great, but cost per user acquisition is not something that’s very easy for a company to fix. ANGI can slash their marketing budget to the bone, but then they would stop acquiring new members. They would probably lose members in fact, as their membership renewal rate is at ~75% and declining. If they cut marketing expense by ~95% as you seem to be suggesting, ANGI might be able to eke out 1 year of slight profits, but they would start shedding members and losing money very quickly. ANGI’s only hope is to keep its marketing budget high and hope it can reach the scale and brand awareness to be able to sustain its business while scaling back marketing costs enough to turn a profit. The fact that ANGI’s revenue growth is slowing down even as its marketing costs keep increasing makes it very unlikely it will achieve that goal.

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