A Tale of Two Franchises and One CEO

[] Find out why Starbucks is ripping while Chipotle dumps. [] [] [] A Tale of Two Franchises and One CEO Starbucks (SBUX) is soaring today… Shares of the coffee giant alone are up over 21%, a record one-day jump for the stock. Meanwhile, shares of Chipotle (CMG) are down about 8%. [] Now you’re probably saying “That’s cool Nate, why are you telling me this?” And that’s because these two stocks have one really interesting thing linking them. Starbucks just poached Chipotle’s CEO. Brian Niccol will be leaving CMG and heading over to SBUX on September 9th with SBUX’s former CEO stepping down immediately. Now, Niccol is a great CEO who has been able to grow Chipotle tremendously since 2018 (truly, one of the top stocks in the entire market in his tenure). Starbucks, on the other hand, has been a very mediocre stock (until today anyway). [] Chipotle’s stock has performed nearly 20X the returns of Starbucks from 2018 through last week. So it’s probably not shocking that Starbucks is looking to shake things up. They just reported another challenging quarter last month. Same-store sales fell 3% (the second straight quarter of decline) while traffic through stores fell 5%. US sales at Starbucks fell 2% during the quarter while over the last year, Starbucks shares have dropped 23%... Starbucks’s former CEO Schultz called for a strategy overhaul back in May in a post on LinkedIn as the coffee giant slowed, but it doesn’t appear they were willing to give him a longer leash to make that vision come true. So what went wrong over the last few years? Maybe people got tired of paying $8 bucks for a cup of coffee, maybe the little option to tip the barista turned even more people off feeling like they were obligated to pay even more, maybe the politics played a bigger role than we realize... In reality, there's no obvious “one thing” that has led to one of the bigger management shakeups of the decade. The big miss, in my view, is that Starbucks has remained pretty stagnant as a product and experience over the last decade. While the market has shifted back to “boutique” experiences with small corner shops getting more love from the coffee culture, Starbucks didn’t adapt. As AI has entered the world in full force, Starbucks hasn’t seemed to offer unique concierge services like many other retailers. And, yes, it’s just too darn expensive to thrive in an inflationary environment where people are trying to watch their budget. But determining the biggest flaws in Starbucks shrinking business is yesterday’s concern. Today, we need to determine whether there is continued upside after a monster 25% move in the underlying stock. Arguably, even more critically, is CMG done? It already had taken one of its biggest beatings in the last decade and this is another big hit for one of my favorite stocks. Well, so far, I like short Starbucks and long Chipotle. Don’t get me wrong, CEOs matter… a lot. But I don’t think the core value and opportunity of these companies has diverged by over 30%. Couple that with CMG already feeling like an undervalued stock to me before this additional 8% drop and that I believe Starbuck’s challenges are still very prevalent… I just tend to think this is an overreaction on both sides. So if I had to bet which stock would perform better over the next 6 months, my money is on the burritos. If you want to play that trade out with me, consider grabbing some December calls on CMG and some December puts on SBUX. I’ll keep an eye on this pair for the rest of the year and let you know if I change course. Nate Tucci P.S. Don’t forget we’re talking about [my dividend plan for the rest of the year]( tomorrow @ 1pm ET. [] A Tale of Two Franchises and One CEO Starbucks (SBUX) is soaring today… Shares of the coffee giant alone are up over 21%, a record one-day jump for the stock. Meanwhile, shares of Chipotle (CMG) are down about 8%. [] Now you’re probably saying “That’s cool Nate, why are you telling me this?” And that’s because these two stocks have one really interesting thing linking them. Starbucks just poached Chipotle’s CEO. Brian Niccol will be leaving CMG and heading over to SBUX on September 9th with SBUX’s former CEO stepping down immediately. Now, Niccol is a great CEO who has been able to grow Chipotle tremendously since 2018 (truly, one of the top stocks in the entire market in his tenure). Starbucks, on the other hand, has been a very mediocre stock (until today anyway). [] Chipotle’s stock has performed nearly 20X the returns of Starbucks from 2018 through last week. So it’s probably not shocking that Starbucks is looking to shake things up. They just reported another challenging quarter last month. Same-store sales fell 3% (the second straight quarter of decline) while traffic through stores fell 5%. US sales at Starbucks fell 2% during the quarter while over the last year, Starbucks shares have dropped 23%... Starbucks’s former CEO Schultz called for a strategy overhaul back in May in a post on LinkedIn as the coffee giant slowed, but it doesn’t appear they were willing to give him a longer leash to make that vision come true. So what went wrong over the last few years? Maybe people got tired of paying $8 bucks for a cup of coffee, maybe the little option to tip the barista turned even more people off feeling like they were obligated to pay even more, maybe the politics played a bigger role than we realize... In reality, there's no obvious “one thing” that has led to one of the bigger management shakeups of the decade. The big miss, in my view, is that Starbucks has remained pretty stagnant as a product and experience over the last decade. While the market has shifted back to “boutique” experiences with small corner shops getting more love from the coffee culture, Starbucks didn’t adapt. As AI has entered the world in full force, Starbucks hasn’t seemed to offer unique concierge services like many other retailers. And, yes, it’s just too darn expensive to thrive in an inflationary environment where people are trying to watch their budget. But determining the biggest flaws in Starbucks shrinking business is yesterday’s concern. Today, we need to determine whether there is continued upside after a monster 25% move in the underlying stock. Arguably, even more critically, is CMG done? It already had taken one of its biggest beatings in the last decade and this is another big hit for one of my favorite stocks. Well, so far, I like short Starbucks and long Chipotle. Don’t get me wrong, CEOs matter… a lot. But I don’t think the core value and opportunity of these companies has diverged by over 30%. Couple that with CMG already feeling like an undervalued stock to me before this additional 8% drop and that I believe Starbuck’s challenges are still very prevalent… I just tend to think this is an overreaction on both sides. So if I had to bet which stock would perform better over the next 6 months, my money is on the burritos. If you want to play that trade out with me, consider grabbing some December calls on CMG and some December puts on SBUX. I’ll keep an eye on this pair for the rest of the year and let you know if I change course. Nate Tucci P.S. Don’t forget we’re talking about [my dividend plan for the rest of the year]( tomorrow @ 1pm ET. [] ABOUT US: We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. Jeffry Turnmire Trading provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from Jeffry Turnmire Trading are for your informational purposes only. Neither Jeffry Turnmire Trading nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. Jeffry Turnmire Trading is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions. Please visit [( for our full Terms and Conditions. [Unsubscribe]( This email was sent to {EMAIL} by Prosperity Pub 101 Marketside Ave, Suite 404 PMB 318, Ponte Vedra, Florida 32081, United States [Prosperity Pub]( [] ABOUT US: We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. Jeffry Turnmire Trading provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from Jeffry Turnmire Trading are for your informational purposes only. Neither Jeffry Turnmire Trading nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. Jeffry Turnmire Trading is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions. Please visit [( for our full Terms and Conditions. [Unsubscribe]( This email was sent to {EMAIL} by Prosperity Pub 101 Marketside Ave, Suite 404 PMB 318, Ponte Vedra, Florida 32081, United States [Prosperity Pub](