Starbucks customers have something like $1.4 billion in balances in the Starbucks app at any given time.

We give them a billion and a half dollar loan, no interest, and only ask for it back when we want to buy some 90% margin coffee from em. Amazing.

It’s time for a thread 👇🏼

First, what is this number and where does it come from?

This number fluctuates daily, and shows up on Starbucks balance sheet as a Deferred Revenue liability.

Here are the actual balances the last 4 years:
2020: $1,288,500
2019: $1,642,900
2018: $1,269,000
2017: $1,456,500

This Deferred Revenue number includes 2 things:

- Unused Gift cards
- Unused app deposits

Everyone is familiar with gift cards, but the majority of this # is a relatively fluid flow of deposits/spending through their mobile app.

Deposit, spend, repeat.

In other industries like insurance, this is called "Float". Profit aside, the providers are touching a huge amount of cash as they collect premiums and occasionally cut a claim check.

Same w/ the balances lingering in your Venmo.

You get free transfers, they touch billions.

In addition to providing a huge float, spending on the app and cards are responsible for 40%+ of their rev.

Far and away the biggest retail loyalty program on the planet it is 3x the size of the next biggest.

GameStop and AMC, prior to being meme stocks, are the runners up. LOL