Best Buy Hammered to 52-Week Low as Amazon Strengthens

By Douglas A. McIntyre Updated Jan 11, 1:38PM EST · Published Dec 17, 9:55AM EST

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Best Buy Hammered to 52-Week Low as Amazon Strengthens — © Ildar Sagdejev / Wikimedia Commons

There was a while, from the start of 2018 until the beginning of September, when investors believed that Best Buy Co. Inc. (NYSE: BBY) had broken free from Amazon.com Inc.’s (NASDAQ: AMZN) gravity. That has been short-lived. Best Buy stock has collapsed to a 52-week low as it becomes clear that its lead in store-based consumer electronics has become less valuable.

Bank of America Merrill Lynch downgraded Best Buy primarily due to weakness in sales of TVs, iPhones and games. The stock plunged on the action. However, the suspicions that Best Buy will be hurt by Amazon and other retailers with consumer electronics departments go back years. Hubert Joly, board chair and chief executive, almost certainly has too large an employee count at 120,000 and too many stores at just shy of 1,000 in the United States. This store count has been close to 1,000 since 2009. Best Buy is one of the few retailers that have not pruned underperforming stores.

Amazon has a tremendous consumer electronics storefront. It also has several advantages Best Buy does not. First among these is Alexa-powered artificial intelligence power home systems. Another is its Fire TV system. And Best Buy does not have anything like Prime, which has a wide array of advantages, from free shipping to music to video streaming.

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Finally, Best Buy cannot instantly change prices and have them seen by an extraordinarily large audience the moment they are posted.

Best Buy no longer can match Amazon in any category, which means its long-term sales trend is down.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.