Elliott Management Corp. has accumulated a large stake in Starbucks Corp. (SBUX) and is agitating to improve the coffee chain’s stock price, The Deal has confirmed.

Consequently, Starbucks becomes a Direct Hit and comes off The Deal’s Watch List of possible activist targets.

The chain joined the list July 12 after it cut fiscal 2024 earnings and revenue forecasts and reported that store traffic slipped 7% during the quarter ended March 31.

Starbucks shares jumped 6% following a Wall Street Journal report issued Friday, July 19, suggesting that Elliott has been engaging with the company. The chain and activist fund could reach an agreement privately soon, the report added.

Even with the spike, however, Starbucks shares are down 23% and 20% over the past 12 months and five years, respectively. Shares dropped significantly after the chain issued its dismal April 30 quarterly report.

It’s unclear whether Elliott, which declined to comment, may seek to shake up Starbucks’ board. The two sides could be negotiating over directorships.

Editor’s note: The original, full version of this article with commentary from John Gordon of Pacific Management Consulting and Jim Rossman of Barclays was published July 22, 2024, on The Deal’s premium subscription website. For access, log in to TheDeal.com or use the form below to request a free trial.