Starboard Value Joins Elliott in Backing Starbucks Amidst Struggles, Pushing for Change

New York-based hedge fund Starboard Value has taken a stake in Starbucks, joining Elliott Investment Management in backing the troubled coffee retailer, according to a report by The Wall Street Journal.

Starbucks has faced significant challenges in 2024, with its stock dropping nearly 20% due to declining sales and a downward revision of its earnings forecast. However, news of Starboard's investment caused the company’s stock to rise by 2.6% on Monday. The exact size of Starboard's stake in Starbucks remains undisclosed.

Starboard Value, known for its activist investment style, holds a diversified portfolio that includes stakes in companies such as Bloomin’ Brands, GoDaddy, News Corp, and Salesforce, according to its latest 13F filing.

Elliott Investment Management has been actively pushing for changes at Starbucks, including seeking representation on the company's board. The firm may even consider launching a proxy fight for a seat. It is unclear whether Starboard will adopt a similar strategy or take a different approach in influencing Starbucks' direction.

Despite stepping down as CEO in March 2024, Howard Schultz remains the largest individual shareholder in Starbucks. Laxman Narasimhan, who succeeded Schultz as CEO, now leads the company, navigating its challenges amidst increasing investor pressure. Starboard's involvement adds another layer of scrutiny to Starbucks' efforts to address its operational difficulties, potentially leading to significant changes at the coffee giant.

Both Starboard and Elliott’s presence may signal a shift towards more aggressive management practices as they push for enhanced shareholder value and operational improvements at Starbucks.