When shares of Starbucks (SBUX) peaked at around $100, the steep sell-off that followed may worsen. On December 20, 2024, Starbucks baristas voted to strike at the Seattle, Los Angeles, and Chicago stores.
The union said that Starbucks did not honor its labor agreement made in February. It is not content with guaranteeing only a 1.5% wage increase in future years. Around 5.5% of Starbucks’s stores are unionized. Watch out for the firm to close more stores in the cities mentioned above.
Volkswagen (VWAGY) avoided a work stoppage with its union. The firm will save EUR 15 million a year by cutting manufacturing capacity. VW will produce 700,000 fewer units at plants across Germany. It will close its Dresden factory at the end of next year.
Be wary of VWAGY stock, since profit margins are only 2.1%. As inflation worsens, the company will need to find more cost cuts to stay competitive. The company faces immense pressure from Chinese electric vehicle producers. China has ambitious plans to dominate the global auto market. Still, shares Li Auto (LI), Nio (NIO), XPeng (XPEV), and BYD (BYDDF) have a limited upside for speculators.
Investors should concentrate on the U.S. firms instead, including Tesla (TSLA) and Rivian (RIVN). Protectionist policies will benefit both firms.
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