Starbucks is reportedly in talks with activist Elliott about a potential stake in the company.

• According to sources, Elliott has acquired a substantial share in Starbucks.
• The report suggested that engaging with management is crucial to improving performance at the struggling coffee chain.
• Laxman Narasimhan, CEO of Starbucks, is facing pressure to improve the company's performance following lackluster quarterly results.

According to the Wall Street Journal, Elliott Management has acquired a substantial share in the coffee chain and is collaborating with management to enhance the company's stock value.

Elliott did not hold a Starbucks stake as of March 31, and its representatives declined to comment on the matter.

On the news that a Starbucks spokesperson stated the company does not comment on rumors and speculation, Starbucks shares experienced a 5% increase.

One of the most active investor activists and a leading hedge fund globally, Elliott has recently acquired significant stakes in SoftBank.

It was impossible for The Journal to determine the extent of Elliott's position or its specific requirements, but there was a possibility of a settlement being reached.

Earlier this year, Starbucks faced an activist effort from its own workers unions, which culminated in a settlement after an organization effort that started in 2021. Ongoing conversations between management and labor are still taking place.

Recently, Starbucks has been facing challenges and undergoing leadership changes. In April, the company reported disappointing quarterly results, with U.S. same-store sales falling 3% and traffic dropping 7%. Additionally, Starbucks cut its 2024 outlook.

Starbucks reported that the rate of incomplete mobile app orders was in the mid-teens, and infrequent customers visited less frequently.

Laxman Narasimhan, CEO, has stated the necessity of enhancing store performance under increased pressure.

Howard Schultz, the CEO of Starbucks, personally selected Narasimhan to succeed Kevin Johnson as the company's leader after his departure. Schultz has since commented on Starbucks' difficulties, but has stated that he does not intend to return as CEO for a fourth term.

— CNBC's Amelia Lucas contributed to this report.