How Investors Are Reacting To Starbucks (SBUX) $4 Billion China Retail Partnership with Boyu and Tencent

• Earlier this month, Boyu Capital entered advanced discussions to bring in Tencent, Singapore’s GIC, and others as limited partners for a planned investment of up to US$4 billion in Starbucks’ China retail operations, following Starbucks’ agreement to sell a majority stake to Boyu and establish a joint venture with a 60-40 ownership split.
• This move into a joint venture signals Starbucks' intent to accelerate expansion into smaller Chinese cities and high-traffic locations by leveraging local partnerships and expertise.
• We’ll now explore how Starbucks’ partnership-driven China strategy could influence its broader investment narrative and long-term growth prospects.

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Starbucks Investment Narrative Recap

To be a Starbucks shareholder today, an investor needs to believe in the company’s ability to revive earnings growth while managing margin pressures, especially as labor costs rise. The recent US$4 billion China joint venture suggests greater local expertise but does not materially change the most important near-term catalyst, execution of the Back to Starbucks strategy, nor does it offset the significant near-term risk of continued margin contraction due to staffing investments.

Among recent announcements, Starbucks’ Q4 and full-year 2025 earnings stand out: while revenue grew to US$37,184.4 million, net income dropped sharply to US$1,856.4 million, reflecting ongoing cost pressures. This result underscores the challenge Starbucks faces in translating overseas investments and operational improvements into stronger profitability, tying back to the same catalysts and risks for the business.

On the other hand, investors should watch for the risk of margin pressure persisting if wage-related costs continue to outpace revenue growth...

Read the full narrative on Starbucks (it's free!)

Starbucks’ outlook anticipates $45.5 billion in revenue and $4.6 billion in earnings by 2028. This is based on 7.5% annual revenue growth and a $2.0 billion increase in earnings from the current $2.6 billion.

Uncover how Starbucks' forecasts yield a $94.17 fair value, a 10% upside to its current price.

Exploring Other Perspectives

Across 13 fair value estimates from the Simply Wall St Community, Starbucks’ target price ranges from US$49.21 to US$110. While some analyses focus on growth plans, margin contraction continues to weigh heavily on performance and sentiment.

Explore 13 other fair value estimates on Starbucks - why the stock might be worth 42% less than the current price!

Build Your Own Starbucks Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Starbucks research is our analysis highlighting 1 key reward and 5 important warning signs that could impact your investment decision.
• Our free Starbucks research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Starbucks' overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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