Starbucks Corporation (NASDAQ:SBUX) is the latest company to get itself into hot water when two black me were arrested last week at one of its locations because they refused to leave and did not make a purchase. While the company has come out and apologized for the incident, that hasn’t stopped many customers from boycotting the popular coffee shop.
The big question is just how much of a fallout we will see come as a result of this.
Travelers will recall that a year ago United Airlines came under significant criticism when a passenger was forcibly dragged from one of its flights. It may come as a surprise that the company’s stock would actually continue to rise despite that event and it wouldn’t be until months later that we would see the share price decline. And even in the past 12 months, the stock has dropped only 6% after what was a very public, negative event.
That’s good news for Starbucks and suggests that while the court of public opinion might punish the company, investors might not. The bad new for everyone else is that regardless how egregious a company may act, it’s no guarantee we’ll see any real retribution unless customers vote with their wallets.
Unfortunately, what’s most likely to happen is that after a few weeks of bad publicity, this will fade into the background. Although negativity is certainly bad for a company, what we’ve seen in the past is that unless it impacts the company’s underlying financials, the stock will overcome the adversity.
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