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Starbucks Corporation (SBUX) Stock Split To Improve Liquidity And Avert Overvalued Sentiments

Starbucks Corporation (NASDAQ:SBUX) announcement that it is to launch a pilot coffee delivery program in Seattle and New York City continues to receive praise reviews from the Street. Speaking to CNBC, Telsey Group Director, Peter Saleh, said the new program could translate to incremental sales, in the long run while relieving the pressure of long queues synonymous with the company’s stores.

Starbucks Corporation (NASDAQ:SBUX)

The delivery program will be available in office buildings in New York including the Empire state building where people will be able to place orders on websites from existing or newly built shops. In Seattle, the service will be available in specific areas including homes and offices.

Starbucks Corporation (NASDAQ:SBUX) is also expanding its presence in China having signed an agreement with Taiwanese drinks maker Tingyi Holding to produce ready to drink beverages in the country.

“The ready to drink coffee for them is more about building the brand than it is in my opinion about driving incremental revenue and bottom line. I think it’s about expanding the brand. Having consumers know about this brand as they open more and more stores in China,” said Mr. Saleh.

Starbucks Corporation (NASDAQ:SBUX) will rely on Tingyi to manufacture the drinks while also helping in the distribution on the mainland. The coffee giant just like other multinationals is relying on local partners as the easiest way to cover the country’s huge consumer market. The ready to drink coffee should improve Starbucks Corporation (NASDAQ:SBUX)’s brand image in China while impacting consumer experience according to Saleh.

The company also announced a 2 for 1 stock split, its first one in nearly a decade. Shareholders who own the stock as of March 30 will be entitled to one additional share for each they have; payable starting April 8. Saleh, however, affirms the stock split will only provide some form of liquidity and nothing more than that.

“If anything it provides a little bit more liquidity although the stock is pretty liquid but other than that I guess it is more psychological that the stock won’t be $100 stock. People won’t think it is overly expensive maybe. So there is some psychology behind it that way but other than that financially it makes no difference at all,” said Mr. Saleh.

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