I got around to seeing M. Night Shyamalan's The Happening last night.
I know. I came duly armed, fully aware that I was about to see a critical disappointment. I went for the popcorn. Sure enough, it was a dud. The popcorn was tasty, though.
Like many out there, I'm a huge fan of Shyamalan's earlier works. The Sixth Sense, Unbreakable, and Signs are three of my favorite films. I even liked The Village, where I guess some of the Shyamalan worship started to fade. Then came the almost unwatchable Lady in the Water. Was it a random lapse? No. The Happening isn't much better.
No, you didn't stumble upon a movie review on a financial website. As the credits rolled, I kept thinking how Shyamalan and Starbucks (Nasdaq: SBUX) have a lot in common these days.
They're no longer at the top of their game. They have fallen from greatness. Their pioneering ways have been diluted by copycats. Worst of all, they can no longer whip out a surprise ending that will throw the jaded market for an applause-worthy loop.
Yes, Starbucks has hit hard times. Lady in the Bean Water, anyone? Founder Howard Schultz has reassumed the role of CEO, but he's got a long way to go to get Starbucks back on track.
- Starbucks is hard to classify as a growth stock, going by how earnings fell during the company's most recent quarter.
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Comps are falling, too.
- Years of overbuilding and menu expansion have saturated key markets and diluted the brand, forcing Starbucks to scale back in every sense, from lowering expansion targets to turning off its breakfast-sandwich-baking TurboChef (Nasdaq: OVEN) convection ovens.
- Competition is everywhere, and it's no longer about swatting away welterweights like Caribou Coffee (Nasdaq: CBOU) or Peet's (Nasdaq: PEET). You're seeing premium coffee poured in places like Dunkin' Donuts, McDonald's (NYSE: MCD), and Burger King (NYSE: BKC).
Bulls will argue that all of this has been priced into the stock, since Starbucks is trading for less than half of where it was when it peaked less than two years ago.
It's a college try, but I feel it's just like me expecting Shyamalan's next flick to be relatively better than his recent disappointments. It is based more on sentimental wishful thinking than realistic trends.
In his prime, Shyamalan threw curves instead of sinkers.
- The protagonist has been dead all along.
- The helpful friend is really the villain.
- The colonial villagers are actually living in modern times.
The Starbucks reality is different. It no longer has superhero powers, with consumers flocking to other savory sipping spots. It is the one living in the past. Is Starbucks still alive?
I see dread, people.
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