Sunday, July 24, 2011

Reversal of Fortune: Amazon vs. Borders

In early January 2002, Borders stock was selling at $21.48 per share, more than twice the price of Amazon shares at $10.16 (see chart above).  Now Amazon is selling for $216.52 and Borders is selling for $0.02. 

10 Comments:

At 7/24/2011 11:14 PM, OpenID Sprewell said...

Not quite a fair comparison because Amazon stock is highly overvalued right now, trading at a nosebleed Price to Earnings ratio of 94. But the broader point still stands that Borders didn't embrace the internet and so is about to be liquidated, while Amazon thrives.

 
At 7/25/2011 7:50 AM, Blogger morganovich said...

this is kind of a silly way to compare them.

you should really use market cap, not share price.

sharecount often changes dramatically.

it's quite possible for a company to go up in value while share price declines.

i'm not saying that happened here, but this is a pretty fraught metric to use.

 
At 7/25/2011 10:59 AM, Blogger Benjamin said...

Morgan Frank-

Are you a rank amateur? Shares prices are adjusted for splits, etc.

 
At 7/25/2011 11:09 AM, Blogger Mark J. Perry said...

Note: I don't have access to market capitalization data, so I displayed share prices, adjusted for dividends and splits. I'm pretty sure the pattern and trends over time of market cap would be pretty similar to the pattern and trends of share price.

 
At 7/25/2011 11:22 AM, Blogger Buddy R Pacifico said...

It is interesting that AMZN is moving full stream ahead into video. Near term earnings might be affected by mega size investment into tech that will compete with Netflix. AMZN's future may be influenced by a societal shift away from written media.

The old two story Borders stores might make nifty urban server farms for AMZN.

 
At 7/25/2011 11:46 AM, Blogger morganovich said...

"Are you a rank amateur? Shares prices are adjusted for splits, etc."

bunny-

are you really that stupid?

let's say ABC corp has a $10 stock price and 10 million shares out.

let's say they do a secondary offering and sell 3 million shares at $9 and the stock drops to 9.

your share price is down 10%.

your market cap is up 17%.

enterprise value can go way up if you issue debt too.

wow, that was stupid even for you.

seems like every time you try to opine on these matters, you just demonstrate how little you understand.

 
At 7/25/2011 11:48 AM, Blogger morganovich said...

mark-

i suspect it would actually make your conclusion more emphatic.

i was just making the point that you have to be careful using pure shareprice appreciation for that sort of comparison.

it's almost never apples to apples.

 
At 7/25/2011 5:02 PM, Blogger OBloodyHell said...

Good riddance. Borders deserves to die.

Remember, these are the useless turds who refused to carry magazines printing the controversial Mohammad drawings several years ago.

I haven't shopped in a Borders since. They can osculate my posterior before they'll ever get any business from me, excepting for fire sale purchases at closing stores.

 
At 7/25/2011 5:06 PM, Blogger OBloodyHell said...

P.S., my point would be that Borders is a poor choice for this comparison.

I'm sure not everyone feels as strongly as I do (though I believe that, like me, the chances of remember this outrage is higher the more likely one is to read and buy books), but there are certainly some -- so Barnes and Nobles or Books-a-Million would be a much better comparison to Amazon if you're going to be comparing modern-internet-vs-"brick-and-mortar" stores. They don't have a notable population percentage that just won't do business with them.

 
At 7/25/2011 11:51 PM, Blogger Larry G said...

Borders is much like Blockbuster.... slow to respond to major trends... and apparently so dependent on their brick & mortar (over-priced) products profit margins that they could nor or would not change.

both turned into business zombies well in advance of their management's recognition.

 

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