December has been a good month for the world’s largest coffee chain. However, an important event is rapidly approaching that may pose complications. Starbucks (NASDAQ:SBUX) has been dealing with a strong unionizing campaign that began in Buffalo, New York, and has spread to several locations. These efforts first began in August, but they began picking up steam in November as employees filed for a union election. Tomorrow, these workers will vote on whether or not to unionize. The campaign’s earlier developments did not pose a significant threat to SBUX stock, but should the union vote succeed, that could change.
What’s Happening With SBUX Stock
Coincidentally, SBUX stock has been rising all day. Despite a slight downtick, it’s still up by more than 3% as of this writing. This positive activity, though, is likely due to a recent upgrade the stock received from financial institution MKM Partners. The firm argued that while SBUX has been underperforming recently, it should be viewed as a buying opportunity.
Today’s growth pattern puts the stock in the green by more than 5% for the week and 1.55% for the month. However, it hasn’t been an easy winter so far for coffee stocks in general. Drive-through coffee retailer Dutch Bros (NYSE:BROS), which emerged as one of Starbucks’ chief competitors after some impressive growth this fall, is down by almost 27% for the month. Like its larger peer, though, BROS is also back in the green today.
Why It Matters
While evaluating SBUX stock, we must be careful to separate actual market events from those involving the union campaign. That said, the upcoming Buffalo catalyst certainly stands to affect the company’s performance for months to come.
InvestorPlace’s Ian Bezek recently placed SBUX on a list of stocks to sell due to the labor shortage, which poses a threat to many companies’ bottom lines. The current union vote is only set to affect three Starbucks stores, but as Bezek notes, if it proves successful, other locations across the country will likely be inspired to follow suit.
This could certainly provide Starbucks with a challenging future, particularly as the company already has a history of treating its workers poorly. CEO Howard Schultz’s use of a Holocaust analogy to emphasize the culture of sharing that embodies his company’s philosophy doesn’t do much to inspire confidence that Starbucks will respond well to further unionization efforts. Indeed, the company has already attempted to engage in union-busting tactics. But in the face of the great resignation, such a strategy could result in more workers quitting.
While tomorrow will bring the actual voting, it is possible that not all the votes will be counted immediately. The Buffalo News reports that “union organizers don’t have a sense of how many have submitted ballots.”
What It Means
This vote marks the culmination of a long campaign that could be the beginning of a larger trend. While it’s unclear as to how Starbucks would react to further unionization efforts, history suggests that its corporate team will push back.
As I discussed in a previous analysis of what the recent unionization efforts from Amazon (NASDAQ:AMZN) warehouse workers may mean for the company’s stock prices, workers unionizing doesn’t have to hurt investors. Often, it comes down to how the company responds. However, neither Starbucks nor Amazon has responded well to these types of workers’ rights campaigns.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.