Best Buy Historical Pricing Analysis

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Over the past 5 years, Best Buy’s stock price has depreciated by nearly 60%; from $47.77 in June of 2007 to $19.81 in June of 2012 as illustrated in the chart below. Best Buy maintained a somewhat stable stock price in 2007 through the housing market crash. However, in November of 2008, its primary competitor, Circuit City, filed for bankruptcy causing Best Buy’s stock to drop to $17.63. In less than 6 months, the company managed to climb back to $41.09. Since then, Best Buy has faced challenges with competitors such as Amazon, Apple, and Wal-Mart. In fact, over the last year its marketshare and stock prices have continued to decline. Stock prices have declined nearly 35% with no true signs of immediate recovery. The chart below indicates how Best Buy is performing relative to its competitors. Although its competitors have continued to grow over the last three years, Best Buy has experienced a slow decline. Its announcement of its plans to expand and open 100 new Best Buy Mobile locations over the next year was superceded by two significant events in April of 2012, the resignation of their CEO and its announcement of its closing 50 stores. Both have caused the Best Buy’s stock price to decline further over the last few months. Even when comparing to the DOW Jones, NASDAQ, and S&P 500 in the chart above, Best Buy’s stock price is well below industry average. From 2007 to 2012, industry averages range from ~10% appreciation to ~-10% depreciation. Best Buy has depreciated nearly 60%. Due to the level of competition and the series of events over the past few months at Best Buy, investments are unattractive and risky to buyers at this time. It is necessary for Best Buy to re-evaluate its strategies. Some may include its financial, marketing, and growth strategies. If these are not addressed, the stock price will continue to decline as buyers

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