Investor Beat -- The Failure of the Nook

Barnes and Noble gets crushed on the market, yet again. How far can the book seller fall? Plus, Yelp sees its day in court, Plug Power makes a smart buy, and one thing to watch for from CarMax's earnings report tomorrow, on Thursday's Investor Beat.

Apr 3, 2014 at 8:22PM

Barnes and Noble was the biggest loser on the New York Stock Exchange today, with shares falling more than 13% on news that Liberty Media, which purchased a large stake in Barnes and Noble three years ago, will now be selling 90% of that stake. Is this the beginning of the end for the embattled book retailer?

On Thursday's Investor Beat, host Chris Hill and Motley Fool analyst Jason Moser discuss Barnes and Noble, and the failure of the Nook. Jason sees the nook as something that will one day soon be completely edged out by the competition, but he also gives several good reasons why the actual book stores for Barnes and Noble aren't done yet, and why the company can still stay afloat if it shifts its focus back to these core competencies.

Then, shares of the consumer review website Yelp are falling today, after the Federal Trade Commission said it has received more than 2,000 complaints about the company during the past five years. Now, a case involving a local business hurt by an anonymous Yelp review is going to be heard in the Virginia State Supreme Court. Is it time for Yelp to make some serious changes? Chris and Jason take a look at the "rock and a hard place" situation facing Yelp today. On the one hand, traffic to the site and the resulting revenue from advertising depend on the idea that consumers are honestly informed from all angles by the reviews they read on the site. On the other hand, the power of a negative review on Yelp,and its ability to crush a business, far outweighs the benefits of receiving a positive review. With no system of checks and balances in place to screen for which reviews are undeserved, businesses can be needlessly damaged by Yelp's current system.

Also, shares of Plug Power are up yet again today, after the fuel-cell company that many investors see as a play in electric vehicles garnered massive returns, and showed investors an unbelievably volatile ride during the past year. Today's gains were on the news that the company would be buying ReliOn, a fuel-cell technology company, in a $4 million all-stock deal. The guys look at the performance of Plug Power's stock during the past couple of years. While Jason sees the acquisition using all stock as incredibly smart by management considering how expensive the stock is today, he sees the dilutive event as one that should give investors some concern. With the company at 40 times sales today, Jason sees this one as incredibly expensive, and one that he'll be watching from the sidelines.

And finally, Jason tells investors what he'll be looking for when CarMax reports earnings tomorrow morning. The company is recommended as a core stock among David Gardner's stock recommendations in the Motley Fool's Stock Advisor service, and Jason will be looking to see whether the company's no-haggle business model is continuing to perform, as reflected by unit sales. Jason will also be watching for the effect the harsh winter weather had this quarter, which hit many retailers very hard, particularly auto dealers.

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Chris Hill has no position in any stocks mentioned. Jason Moser has no position in any stocks mentioned. The Motley Fool recommends CarMax and Yelp. The Motley Fool owns shares of Barnes & Noble and CarMax. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

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That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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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