Best Buy's Desperate Gamble

The following video is part of our “Motley Fool Conversations” series, in which analyst John Reeves and advisor David Meier discuss topics across the investing world.

Best Buy recently put up the list of competitors it will price match. This seems like the last straw for the struggling electronics retailer. Best Buy has been struggling for a number of years, as the competition for electronics and entertainment has ramped up. As prices have come down for many items, and the mix of products within the stores has changed over time, margins have compressed. Although price matching with HH Gregg, Target, Hewlett-Packard, or Sears seems rational, doing that with Amazon.com or newegg seems disastrous. Best Buy looks like a classic value trap. It has strong brand name and is fairly well run, but it’s fundamentally a declining business.

 

 

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David Meier has no positions in the stocks mentioned above. John Reeves has no positions in the stocks mentioned above. The Motley Fool owns shares of Best Buy. Motley Fool newsletter services recommend Best Buy, Best Buy, and hhgregg. 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 Motley Fool has a disclosure policy.


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