Starbucks Workers Strike on Red Cup Day. The Stock Could Be Ready to Break Out Anyway.

Starbucks shares have fallen more than 4% this year, lagging behind the broader market, which has seen double-digit gains. (NICOLAS ASFOURI/AFP/Getty Images)

Starbucks union members went on strike across the U.S. on Thursday in what they deemed a “Red Cup Rebellion,” but the stock was shrugging off these concerns. In fact, it looked ready to break out.

The stock touched recent peaks on Oct. 2 and Oct. 27, when it closed at $86.72 and $87.22, respectively. Now, it’s roaring back to those levels and is possibly on pace to surpass them. Shares were nearly flat at $87.20 on Thursday after ending Wednesday’s session up $87.26.

Technical analysis of the stock shows it breaking above a bearish descending triangle pivot near $86, or a formation that points to a likely continuation of a downtrend.

Investors were thinking the stock would break below the bearish triangle pattern, but the latest move caught them by surprise, forcing them to cover their positions. This is known as a false breakdown, and often sparks sharp moves higher in the opposite direction.

Starbucks shares touched lows near $80 in April but appear to be roaring back. The stock saw big reversals in the week ending Oct. 17 as well as last week, where it advanced by 6% and 9%, respectively.

These stock moves came as more than 1,000 workers geared up to strike in 45 cities across the U.S., including in states like California, Pennsylvania, and Texas. The nationwide demonstration coincides with Red Cup Day, a promotional event where customers who order a holiday-themed beverage at eligible stores receive a free, reusable cup.

The effort is led by Starbucks Workers United, which describes itself as “a worker-led unionizing effort run by people who are also working regularly scheduled shifts.”

Workers first presented a set of proposals for negotiation to increase wages in September 2024, which was rejected by Starbucks three months later. The company then submitted what the union describes as “an unserious economic package” that failed to raise wages in the first year of the contract, and clear up other issues with hours and staffing.

The company continues to delay progress toward an agreement, the union alleged in a memo shared with Barron’s. “Now, baristas are fed up with Starbucks’ union busting and failure to finalize a fair contract, and they’re taking action.”

Starbucks, in its own statement, said Workers United represents just 4% of its partners and “chose to walk away from the bargaining table.”

“We’ve asked them to return—many times. If they’re ready to come back, we’re ready to talk. We believe we can move quickly to a reasonable deal,” the company added.

Around 550 of the 10,000 company-owned Starbucks locations in the country are unionized. The coffee chain closed 59 unionized stores in September as part of a larger corporate restructuring.

Shares have declined 4.4% this year. The benchmark S&P 500 index, by comparison, has gained around 16%.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com