Starbucks shares plunge after company shutters China locations near coronavirus outbreak
- Shares plunged in early trading after Starbucks announced coronavirus concerns have led the company shut down operations in China's Hubei province during the Lunar New Year.
- Fast-spreading coronavirus has already infected 2,700 and killed 80, spreading across the Asian continent and globally.
- Starbucks has been expanding its China operations, with the company reporting a 45% increase in active Chinese users of its rewards program last quarter.
Starbucks shares plunged as much as 4.9% in early trading Monday after the company announced it would halt operations in China's Hubei province out of concern about the spread of coronavirus.
The shutdown, which includes closing stores and halting deliveries, will last the duration of China's week-long Lunar New Year holiday, Starbucks announced Saturday on Weibo, a Chinese social media platform similar to Twitter. Reuters previously reported the posting. Starbucks also made a donation of 3 million yuan to China's Red Cross Foundation, it announced in the same post.
Hubei province has a population of nearly 60 million, and includes the city of Wuhan, where the coronavirus initially took root. Since then it has spread to countries across Asia, including Japan, Malaysia, and Cambodia, as well as to the US, Australia, Canada, and France. It has infected more that 2,700 people and killed 80.
In an effort to limit the impact of the virus, the Chinese government has shut down cities, limiting the travel of over 40 million in the country.
Starbucks has been expanding its businesses in China over the past year. Last quarter, the company reported 1o million active Chinese users of its rewards program, a 45% increase on the same period of the year prior, Reuters reported.
Last earnings season was a win for Starbucks, with shares jumping 3% after the company released its numbers in October.
The company is set to announce its next round of earnings Tuesday. The stock has 15 "buy" ratings, 17 "hold" ratings and one "sell" rating from analysts on the Street, according to Bloomberg.