Starbucks stock has been getting absolutely slammed for over a year now, and recently its gotten even worse. On October 6, 2006 Starbucks sat at a lofty 38.41, just off its all-time high – yesterday the stock closed at 18.70 a level it hasn’t been at in nearly 4 years. Analysts are slashing ratings and concern is growing.

You’d think Starbucks would be a good stock to own, those cups are ubiquitous, some cities have 2 Starbucks per block – but that’s part of the problem, they started growing way too fast. The other part is that the competition caught on to their game. For too long Starbucks was selling “gourmet” coffee at a premium price, now other chains such as McDonalds are realizing that they too can sell “gourmet” coffee – and if they do so at a lower price, might just woo some customers from Starbucks.

Starbucks coffees usually range from $2 – 4 dollars which is really ridiculous when you think about it – $4 for a cup of coffee? Say you average buying one a day (some days you get none, somedays two, etc…), that’s almost $1,500 a year spent on coffee! For someone making $100,000 that might not seem to be that much of a problem, but someone making $30,000, that might be two or even three months worth of rent! Again, on coffee.

You can buy some really nice coffee makers for $100-150 bucks. While that may seem like a lot for one purchase, if you’re saving yourself over $1,000 a year after you buy the ground coffee for it, it’s a huge savings. So why doesn’t everyone do that? The same reason they don’t buy those new more-efficient light bulbs. Most people simply refuse to realize that spending a little more upfront might save them a lot of money in the long run.

Most people of course don’t think about how much money they are wasting at the time of purchase for a small item. It’s $2-4, big deal. But it adds up quickly. Now with a worsening economy and rapidly rising gas prices some people may finally be catching on – and Starbucks may have to do something about it stop the bleeding. Maybe they should cut some prices or release new coffees at a lower price.

$4 for a cup of coffee is absurd – Starbucks has gotten away with that for far too long. It’s when money gets tight that people start to realize that – and money is starting to get tight for a lot of people…

[UPDATE 1/7/08]: And 3 days later here’s The Wall Street Journal saying the same basic thing…

[UPDATE 1/7/08]: Starbucks CEO Jim Donald has been fired and replaced by founder Howard Schultz. Good move. Now about those prices…