Analysts were out in full force to comment on the results, saying that increased competition from both the high end coffee shops along with discount chains like McDonalds are part of a growing concern for Starbucks. Chief Executive Kevin Johnson was quoted as saying that there was no real evidence that competition is looming. "We are not going to be squeezed in the middle," he said. Investors did not like this "blind to competition" response which further pushed shares lower.
As for the price of shares, they have been under severe pressure for the latter part of the year. There is no doubt that investors have concerns which has caused shares to underperform the markets greatly. If we factor in the earnings drop, shares are now lower by around 5% for the year.Technical traders will note that the selling pressure form the earnings move may push shares out of a three month range. The next support area they would consider is the $50 mark.
For now it seems that Starbucks has to first admit that they have work to do, then get to work. Investors are more than happy to put money in better performers for now.