Best Buy gets butchered

Shares of the electronics retailer are crashing hard. Should this be the wake-up call that sends investors scrambling?

By Motley Fool Investor Beat Jan 16, 2014 2:30PM
Shares of Best Buy (BBY) took a hard fall Thursday, after the company announced some disappointment in its holiday sales numbers.

While many investors have long looked at Best Buy as a business in trouble in light of the changing retail landscape calling the company's business model into question, shares more than doubled in 2013.

In this video, however, Motley Fool analyst Morgan Housel doesn't necessarily think that last year's rally in this stock was due to its turnaround story as a business alone.
He suggests that much of BBY's rockstar performance in 2013 could have been due to short sellers covering their positions in the rising stock, and that fundamentally the business is still deeply troubled. He sees this earnings news as confirmation that the company is having an increasingly harder time competing with the business models of Amazon (AMZN) or Wal-Mart (WMT), that can slash their prices to the bone and make up the difference in volume, something Best Buy just isn't able to do.Credit: © CNY Collection/Alamy

Caption: Best Buy store in Plattsburgh, NY

Even with the stock off over 25% Thursday, Morgan doesn't see any value play here. He still thinks it looks too pricey after last year's run-up despite cratering Thursday, and considers this much more of a risky speculative play than a long-term investment. Foolish investors should consider staying away from this one.

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Tags: BBYWMT
11Comments
Jan 16, 2014 3:09PM
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Gee wasn't it just a week or so ago the financial "experts" touting this stock as a "Best Buy"??  Best Buy along with Sears, JC Penney and a few others are dying a slow death...it is only a matter of time.
Jan 16, 2014 5:03PM
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I dont see what the problem with best buy is. Last week, I ordered a breville juicer from best buy online for store pick up.

99.00 dollars, same price as amazon, walmart etc... I place the order online, drove 10 minutes to the store, picked it up at the counter, no waiting in line.

With so many examples such as mine, why would anyone pay the same and wait days ordering from amazon or the likes?

I think bestbuys back end finncials are the real problem, not the brick and mortar aspect.


Jan 16, 2014 5:15PM
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Financial "experts"-- numbers people who drink Kool Aid and bend figures to the will and whim of wealth. A reminder that financial "experts" recommended the mass termination of America.

America-- a former Land of Opportunity gone fallow while financial "experts" rape and pillage it to death.

Computer toys-- aimed at kids whose parents work 4 jobs now to put food, just food, on the table and pay $400,000 over 4 to 6 years to acquire degrees that don't translate into careers. 

Perhaps mass terminating financial "experts" is the REAL answer.
Jan 16, 2014 4:40PM
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Problem with that, is there will BE FEW electronic shops or businesses still open...

THEN your "only CHOICE" will be on-line..

Good luck with all those hassles, BECAUSE that is what it will be in a few years...


Wal-Mart and Staples should just get "cardboard cutouts" to "showroom" in their stores,.,.

With a point of sale Computer to order with..

Isn't that all, the idiots need today.....That buy on-line, a picture and a keyboard..

Why stock any inventory ???

Jan 16, 2014 3:44PM
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So the only place you'll be able to try a personal computer before buying is Apple, Microsoft, Staples and Wal-Mart. Then you buy it online?
Jan 16, 2014 3:24PM
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If Best Buy goes bankrupt, where will people buy electronics?
Jan 16, 2014 9:59PM
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A future Republican in the making.

http://www.youtube.c​​​om/watch?v=AukE25i​s​p​VY

They are simply adorable and loving little things aren't they?
Jan 16, 2014 6:58PM
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