The traders are taking another look at Starbucks after the java giant moved to hike prices in several major markets including Los Angeles and Chicago.
According to a Reuters report, the price of small latte went up 10 cents, to $2.75 at a Starbucks cafe in downtown Los Angeles.
10 cents might not sound like much conversationally but it’s almost a 4 percent increase.
Strategic investor Dennis Gartman thinks the price hikes are quite interesting, because he doesn’t think Starbucks really needed them.
”It’s almost a scam,” Gartman says. “They’re blaming the price hike on rising prices except coffee prices are down 30% in the last month and a half.” (see the chart above)
But he adds Starbucks’ audience is so loyal, “they will probably get away with it.”
And that’s exactly why trader Pete Najarian is bullish on Starbucks. “Their margins will expand because of the price hikes,” he says. “That’s good for the stock.
”And they’re expanding,” he says. Another reason Pete likes it.