Yahoo Finance If You’d Invested $1,000 in Starbucks’ IPO, Here’s How Much You Would Have Today
Starbucks coffee was founded in 1971 and quickly grew from a one-store shop in Seattle to a global phenomenon, selling millions of drinks per week. Millions of Americans, and indeed consumers around the globe, couldn’t imagine starting their day without their Starbucks coffee. This level of brand loyalty has translated into big profits for the company, and its stock price has reflected this success. If you ever imagined what would have happened if you had diverted some of your coffee money into shares of the company’s stock, read on as we will look at what $1,000 invested in Starbucks would be worth today.
Find Out: In 5 Years, These 2 Stocks Will Be More Valuable Than Apple
Learn More: 4 Genius Things All Wealthy People Do With Their Money
Wealthy people know the best money secrets. Learn how to copy them.
What If You Invested $1,000 in Starbucks’ IPO?
Starbucks’ stock was priced at $17 per share when it went public on June 26, 1992. Over the years, however, Starbucks management has enacted six 2-for-1 stock splits, increasing the IPO share count by a factor of 64. Thus, on a split-adjusted basis, the IPO price for Starbucks drops to just 27 cents per share.
If you invested $1,000 in the Starbucks IPO, you would have purchased 58.82 shares. After all of the company’s stock splits over the years, those initial 58.82 shares would have grown to 3,764.71 shares, or a factor 64-1.
While the price of Starbucks coffee may fluctuate slightly based on varying factors ranging from geographical location to inflation and supply chain issues, it remains fairly steady. Starbucks stock, on the other hand, has been a huge wealth generator for those who invested in its IPO 32 years ago.
The stock price for Starbucks closed at $76.88 per share on May 29. The 58.82 shares that an investor could have bought with $1,000 in coffee money or extra savings — which would have grown to 3,764.71 shares today — would be worth a staggering $289,430.91 as of May 29.
Be Aware: 3 Types of Investments Predicted To Plummet in Value in Summer 2024
Should You Invest In Starbucks Today?
While it’s fun to daydream about what could’ve been, it’s important to remember that you can only make decisions based on the information you have in front of you. With that being said, it brings us to the topic of investing in Starbucks stock today.
With the stock price dropping around 16% since the year started and far off from the 52-week high of $107.66, does it make sense to invest in the coffee giant right now?
Missing Earnings Report
When Starbucks reported its financials for the second quarter, it missed Wall Street’s estimates for earnings and revenue for the second quarter in a row. With same-store sales dropping 3% across the country, there was frustration over the domestic business.
Analysts were surprised by the disappointing results and investors were quick to sell-off their shares. The announcement of the missed earnings led to a drop in the share price of over 10% in the after-hours trading on April 30.
Potential for Growth
Starbucks CEO Laxman Narasimhan was disappointed with the earnings but mentioned that the brand’s strength would help it rebound along with a few other key initiatives. With a focus on updating the app and mobile offerings, improving service times at stores and a revamped menu, Narasimhan feels that business can turn around.
Former CEO Howard Schultz shared his insights on a LinkedIn post about how the coffee retailer needs to focus on improving its U.S. stores since the traffic domestically fell by 7% for the quarter. Some analysts feel that the chain could be facing consequences due to positions on geopolitical issues
With a one-year target price of $88.98 and a strong global presence, investing some money into Starbucks wouldn’t be the worst idea right now. However, it’s worth pointing out that the company will have to figure out how to improve store traffic amid concerns of boycotts and staffing issues that could hurt it.
Getting a cup of coffee in the morning — or even throughout the day — is a treasured daily ritual for many Americans. Yet, cutting out this daily cup of coffee and investing the money instead is an example often used by financial planners as a way to create wealth.
While the case of Starbucks is an extreme one, the fact remains that giving up coffee or finding another way to save up $1,000 could have translated into nearly $300,000 in added wealth for investors in the company’s 1992 IPO.
John Csiszar contributed to the reporting for this article.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: If You’d Invested $1,000 in Starbucks’ IPO, Here’s How Much You Would Have Today
