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Barnes & Noble Shares Plunged: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Barnes & Noble (NYSE: BKS  ) sank 15% in intraday trading Friday on news that Liberty Media will make a $204 million strategic investment in the beleaguered book retailer.

So what: That kind of commitment would usually be a huge positive for shareholders, but it also means that Liberty's previous $17-per-share takeover bid is now off the table. Of course, given that rumors about Liberty's change of heart were already floating around (the shares are now down 40% in August alone), today's news isn't that big of a surprise to Mr. Market.

Now what: I wouldn't be so quick to pounce on this plunge. Without the glowing prospects of a buyout, buying into a company that's being punished by discounter Wal-Mart (NYSE: WMT  ) on the bricks-and-mortar side, as well as Apple (Nasdaq: AAPL  ) and (Nasdaq: AMZN  ) in the digital space, isn't particularly appealing. Liberty's investment will help, but it seems too little too late.

Interested in more info on Barnes & Noble? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Apple, Amazon, and Wal-Mart; as well as creating a bull call spread position in Apple and a diagonal call position in Wal-Mart. The Fool owns shares of Apple and Wal-Mart. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

Read/Post Comments (5) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 19, 2011, at 3:22 PM, megoogler wrote:

    Once again, disregard this "opinion" as Fool site has always been in love with Amazon and been hating Barnes & Noble. Last I heard, it's actually the physical stores that are profitable for B&N while Nook with all it's glory requires a l lot of investments and makes no money. For investor with a brain, stores should be considered a big asset for BKS especially after Borders is gone. The company just had $200 mil invested into it! In normal times it would mean a string buy advise... Unfortunately, it's hard to find brains at Fools editorial writers.

  • Report this Comment On August 19, 2011, at 3:37 PM, dragonLZ wrote:

    I don't think you are right about the reason Barnes & Noble shares plunged.

    It's all cato's wife's fault...

    (you can see it here: )

  • Report this Comment On August 19, 2011, at 4:15 PM, catoismymotor wrote:

    Thanks, dragon. I think. LOL!

  • Report this Comment On August 19, 2011, at 6:23 PM, TMFTomGardner wrote:

    megoogler, I don't see any hidden agenda or sinister bias. It's just been a very good call to be long Amazon for 10+ years...and short BKS. I don't see enough evidence to suggest the directions will change. But I and our analysts remain open! (And, we never agree completely on much of anything at The Fool...!)

  • Report this Comment On August 22, 2011, at 12:20 PM, PSU69 wrote:

    B&N did sell over 800,000 book downloads via Nook. The Borders reality will help pump up Q3 & Q4 for Barnes. They also have Starbucks!

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10/21/2016 4:02 PM
BKS $10.75 Down +0.00 +0.00%
Barnes and Noble CAPS Rating: *
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AMZN $818.99 Up +8.67 +1.07% CAPS Rating: ****
WMT $68.34 Down -0.39 -0.57%
Wal-Mart Stores CAPS Rating: ***