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Yahoo
21 minutes ago
- Yahoo
The Fed is concerned. This economist explains exactly why.
KPMG US chief economist Diane Swonk joins Market Domination with Josh Lipton to discuss what the Federal Reserve is concerned about when it comes to price stability and tariffs. To watch more expert insights and analysis on the latest market action, check out more Market Domination. Sign in to access your portfolio
Yahoo
an hour ago
- Yahoo
DigitalOcean Holdings (DOCN) Stock Falls 11% Over Past Week Amid Tech Sell-Offs
DigitalOcean Holdings announced the launch of its GradientAI Platform, a major leap in simplifying AI integration for enterprises. Despite this launch, the company's stock dropped 11% over the past week. The broader market decline, provoked by weak job data and tariff-related uncertainties, may have influenced this dip. The tech-heavy Nasdaq's struggle, combined with widespread tech sell-offs, likely added weight to DigitalOcean's stock movement, rather than countering it. While the company's innovative platform aims to drive growth, its recent price movement reflects broader market trends more than the company's specific developments. You should learn about the 2 possible red flags we've spotted with DigitalOcean Holdings. We've found 22 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. DigitalOcean Holdings' recent announcement of the GradientAI Platform may significantly impact future revenue and earnings by simplifying AI integration for its enterprise clients. This aligns with their ongoing expansion in AI activities, as highlighted in their 160% year-over-year AI ARR growth, and could enhance their revenue stream. However, despite these developments, the company's shares have not shown immediate positive returns. Over the last year, DigitalOcean's total shareholder return was a 10.28% decline, reflecting broader challenges in the tech sector, particularly within the context of US$806.59 million in revenue and US$108.56 million in earnings. This underperformance is also evident when compared to both the US market and the IT industry, which saw returns of 17.5% and 22.8%, respectively, over the same period. The launch of DigitalOcean's AI initiatives indicates potential upside in revenue and earnings forecasts, partially supported by projections of a 13.2% annual revenue growth. Analyst forecasts suggest earnings could rise, fueled by strategic investments in data center expansion and increased ARPU. These forecasts support a price target of US$38.82, representing a significant potential upside from the current share price of US$25.74. However, the ambitious price target requires future performance alignment with analyst expectations, including substantial revenue and earnings improvements. Thus, while the GradientAI launch is promising, its immediate effect on share prices appears muted by larger market dynamics, leaving analysts' projections to reflect more optimistic longer-term potential. Click here to discover the nuances of DigitalOcean Holdings with our detailed analytical financial health report. 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. Companies discussed in this article include DOCN. This article was originally published by Simply Wall St. Have feedback on this article? Concerned about the content? with us directly. Alternatively, email editorial-team@ Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Miami Herald
an hour ago
- Miami Herald
Starbucks' problems may be too big to fix
In its early days, Starbucks' approach was unique. Unlike rivals like Dunkin', Tim Hortons, and breakfast diners, its mission wasn't to provide one coffee for everyone as fast as possible. Instead, it treated making coffee like a craftsman makes fine furniture, focusing on the highest quality product regardless of how long it takes. That approach helped Starbucks grow from a single store in Seattle, Washington, to a coffee powerhouse with 32,000 stores located in just about every nook and cranny of the globe, including: Over 18,000 stores in North 2,800 stores in than 6,500 stores in 1,300 stores in the Middle East and North Africa. 1,800 locations in Latin America, including more than 70 in Colombia, putting Starbucks about as close to the coffee's origins as possible. With that kind of growth, and plenty of shareholders eager for ever-increasing profits, it's pretty unsurprising that Starbucks has dealt with growing pains. The company has faced controversies over worker pay (and what they wear), and customer complaints over inconsistent drink tastes, food freshness, and, more generally, the rise of a less-relaxed cafe vibe, too focused on boosting transactions and profit margin. The situation has left many scratching their heads, wondering if Starbucks' new CEO, Brian Niccol, can get things back on track. Long-time hedge fund manager Doug Kass is among the doubters. He recently sent a particularly harsh message about Starbucks, suggesting Niccol's strategy to get Starbucks back to its roots is unlikely to pan out. Image source: Goodney/Bloomberg via Getty Images Starbucks' (SBUX) stock price financed a good chunk of the company's global expansion. Investors eagerly bought shares early in the company's growth phase to profit from the opportunity for its customer-first approach to dislodge market share from rivals like Tim Hortons and Dunkin'. Long-time shareholders have been handsomely rewarded, given that Starbucks shares have surged since its IPO in 1992. A $10,000 investment then would be worth over $3 million today. Related: Starbucks abandons key strategy to embrace its past However, many investors' love affair with Starbucks has faded since the company has mostly saturated major US markets like New York and California, reducing chances for sales growth. Its share price is up just 15% over the past five years, while the S&P 500 has climbed 89%. In 2025, Starbucks' stock price has fallen nearly 5%. With Starbucks stores seemingly everywhere, long-time hedge fund manager Doug Kass suggests the company's strategy nowadays is less about reimaging coffee houses and more about milking as much money out of existing locations as possible. Such an approach can boost earnings in the short term, but it poses a significant long-term risk to Starbucks' brand. "[Starbucks] morphed into overpriced purveyors of food/coffee - while the quality of their product offering has deteriorated and the selling cost of the product has risen," wrote Doug Kass in a post to investors on TheStreet Pro. It's not just the coffee, either. While many may think Starbucks bakes its treats on site, many are previously frozen. "I couldn't create a danish as unappealing," said Kass, who has managed money professionally for about 50 years. Some Starbucks employees agree that the company's mission has lost its way. It was once highly recognized as a pioneer in employee pay, offering solid wages and a "partner" approach to its workers. Employees, however, have increasingly explored unionization in recent years, saying the faster-paced environment is taking a heavy toll on its once-lauded baristas, and pay hasn't kept pace. Starbucks' response to unionization has drawn fire from worker advocates who suggest management has engaged in union-busting decisions. For example, the National Labor Relations Board (NLRB) has accused the company of firing or disciplining workers, including the high-profile case involving the "Memphis 7," seven workers terminated after advocating unionization. That case went to the Supreme Court, where an earlier court decision to grant an injunction supporting the workers was reversed in Starbucks' favor, and the case was sent back to the lower courts. The first corporate Starbucks location to unionize was in Buffalo in 2021, led by Starbucks Workers United. As of August 2025, workers at over 600 Starbucks stores across the US have voted to unionize, according to Workers United. The company's frayed relationship with some employees isn't the only problem CEO Brian Niccol is trying to fix. Niccol joined Starbucks as CEO in 2024 after over six years at the helm of Chipotle. Shortly after Niccol took over as Starbucks' CEO, he acknowledged, "a shared sense that we have drifted from our core" and announced his "Back To Starbucks' plan to get the company back on track, focusing on a "welcoming coffeehouse where people gather and where we serve the finest coffee, handcrafted by our skilled baristas." However, those comments and Niccol's plans sound hollow to Kass. "When he got to Starbucks, Niccol started off by using fancy jargon to distract from the fact that Starbucks is losing to both value and premium brands/operators," wrote Kass. "Starbucks now faces a very expensive overhaul in its physical locations and product offerings." Starbucks' competitive advantage hasn't been lost on rivals. Big rivals like Dunkin' and McDonald's have expanded menus, including popular refreshers, while local mom-and-pop cafes have leaned hard into the artisanal coffee house vibe. Related: McDonald's to test five crazy new drinks Winning back market share from those players won't be easy. As a result, Niccol's overhaul could pressure Starbucks' profits while ultimately doing little to restore Starbucks's culture, disappointing investors. "The brand is now very weak competitively - they aren't premium (artisans, local brands, etc.) and the previous also-rans are coming in hot with smaller footprints," said Kass. "From a product standpoint, they sell more chemicals, sugar and ice - it's not coffee." Undeniably, many remain loyal Starbucks fans, but there are more choices, and with less connection to the employees, the moat of loyalty isn't nearly as strong as it was in the past. "It is the Regal Cinemas concession stand without the movies. The notion that the baristas want to hang with the customers has been lost," said Kass. "I suspect the turnaround in both companies will take a lot longer than the consensus expects." To be sure, Starbucks' challenges aren't unique. Indeed, most companies experiencing the kind of success it has experienced deal with similar issues. Still, the hyper-competitive coffee market and the challenges facing Niccol leave Kass thinking that there are better alternatives for investors. "I would not bottom fish despite the material share-price weakness," concluded Kass. Related: Why did stocks tumble this week? The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
