Starbucks’ struggles this year are apparently luring activist investors.
The hedge fund Elliott Investment Management has built a big stake in the Seattle-based coffee shop giant and is privately pushing the company to make changes to boost its stock price, according to multiple media reports.
The Wall Street Journal first reported on Friday that Elliott has taken a stake in the company. Reuters has since confirmed the report.
The news sent Starbucks stock up 7% in late afternoon trading on Friday.
“We do not comment on rumors or speculation,” a Starbucks spokesperson said in an emailed statement. Representatives for Elliott have not yet responded to a request for comment.
The reports come as Starbucks deals with an unexpected set of traffic challenges that started suddenly last November, following nearly two years of work to improve the company’s operations.
Sales turned starkly south in the middle of that month and have largely stayed there, as mostly occasional consumers reduced their visit frequency. Speculation about the reasonings has varied, including concern about pricing and worries about backups in the morning from excessive mobile orders.
But some of it may also be rooted in geopolitical issues, as the company has found itself the subject of social media boycotts over the Israel-Palestine conflict.
Traffic challenges were so severe that it overshadowed what was a successful springtime introduction of lavender-flavored beverages.
The company has since taken numerous steps to boost traffic, with a series of offers designed to bring in members of its Starbucks Rewards loyalty program during slow periods.
It also introduced a “Pairings” menu, featuring a small coffee and a croissant or a sandwich priced between $5 and $7.
The company’s challenges over the past few months have sent the company’s stock falling. Starbucks stock opened trading Friday down 35% since hitting $114 per share last April.
News of the activist came on a particularly bad day for Starbucks, which lost its mobile ordering system Friday due to the CrowdStrike outage.
Elliott Investment Management has interests in a variety of different companies.
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