Although Best Buy's stock prices were not doing the greatest in April of 2015, the announcement of their Head Chairman's resignation certainly took a toll on their stock prices. Tyabji has seen many different stock patterns as Head Chairman of Best Buy. Since Best Buy's low point in 2013 at a share price of just over $11, Tyabji managed to grow that up to over $40 per share. Since the announcement, Best Buy's stock has decreased to $32 per share.
From the image above, it is clear that Best Buy was capable of maintaining a level share price up until the announcement. Since April of 2015 Best Buy has planned to decrease their market over these past few months. They had already sold half of their stock to the European market due to a decline in revenue. Most of Best Buy's market is right here in America, which is why they did not seem too worried about decreasing their global market. Their share prices and earnings per share are expected to drop over the next year and into 2016. This may be the start of a restructure for Best Buy.
Best Buy's Michael Pachter, one of the best analysts Best Buy has, increased the companies 12 month range by 54% and created a short increase in share price in March of 2015. Best Buy plans to buy back up to $1 billion worth of stock. Although this may show short-term loss within the company, it may increase the value of their stock in the long run.
In March of 2015, Best Buy's Services Chief Andrew Askew decided to leave the company after two short years of leading the Geek Squad Division. This is most likely another reason as to why Best Buys share prices have been slowly decreasing since April of 2015. The Geek Squad division was a highly valued service by customers who need support with their electronics. Sales in the service department had been showing a 10% decrease in sales due to cheaper products with warranties that actually cover services to the products. This could potentially mean the end of Best Buy's Geek Squad, which would leave over 20,000 people to lose their jobs. That could potentially impact the public's moral view of the company itself.
Despite all of these major set backs that have impacted Best Buy's share prices over the last year, they should still continue to grow. Best Buy does not have many large competitors in their electronics market. Wal-Mart may be their biggest competitor, but they do not have the same level of electronics that Best Buy has. Wal-Mart trumps Best Buy in just about every category due to their high level of product inventory and store locations. Best Buy would have to up the level at which they do business to even come close to Wal-Mart. Wal-Mart buys inventory in such high volumes that they are able to sell at cheaper prices. The only thing positive for Best Buy against Wal-Mart is that they have an exceptionally large variety of electronic products because that is what they do.
While Best Buy has been declining over the last year, they expect their 4th quarter sales revenue to increase and their 1st quarter of 2016 to decrease and remain steady while they are continuing to restructure.
After the release of online sales by the US Department of Commerce, online sales showed a 14.5% increase in the 1st quarter of 2015 alone. Best Buy shows an increase of around 3% since 2013. Although 3% may seem insignificant to most, it is in fact quite a large sum of money that has increased.
While Best Buy has taken several hits on share price over the last 6 months, many people believe to see profits from them in the near future. Tyabji's leave may have negatively impacted the company, but Best Buy seems to have plans to increase revenue through 2016 and increase share price as well.
In summary, Best Buy is not doing very well as of right now, but will succeed in the near future in increasing sales and share price. It may not look like a good company to buy into right now, but because the share price is dropping it may very well be the best time to buy. If Best Buy can keep up increasing their sales and restructuring their company for the better, we may see a large increase in share price near the end of 2016 and further.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: While this blog was written in my own words, I did receive information from other sources.