Barnes & Noble’s stock price tumbled Thursday and Friday after Liberty Media Corp. announced in a joint release the company would shed most of its stake in the book retailer.
But experts questioned whether the news is a sign that digital offerings are replacing physical books or even a bad omen given the nature of the business relationship between the companies.
“It’s actually a relatively straight forward business decision,” said Michael Cader, the founder of publishersmarketplace.com. “The stock was up significantly for the last couple months.”
Shares of Barnes & Noble sharply rose from $13.25 Feb. 3 to $22.11 on April 2. So even though shares fell more than 13 percent on Thursday and were down another 4 percent Friday, the stock is still trading well above its February price.
As for eBooks, sales of the digital offering have generated more than 20 percent of the net revenues for publishers, according to the Association of American Publishers.
Sales for eBooks are starting to level off, Cader said, but such sales have established a significant foothold. Still, physical stores have some advantages such as when a child comes to the store to physically look around and pick out a book, he said.
Mike Shatzkin, founder and CEO of the Idea Logical Company, a book industry consultancy said he has long-term concerns about companies such as Barnes & Noble, which rely on people physically visiting stores to make purchases.
But Shatzkin said a deeper look at Barnes & Noble showed Nook sales and content for the device has been the company’s greatest short-term problem.
“They’re losing sales, but they’re still able to operate profitably,” he said.
Book chains, in general, have struggled in recent years. Borders bookstore filed for bankruptcy in 2011. With 642 stores, Borders was the second largest bookstore chain in the United States.
Books-A-Million now ranks second in U.S. stores despite recently closing stores in Alabama, Florida, South Carolina, Michigan and Ohio.
Some believe stock for Barnes & Noble, a publicly-traded company, also is in trouble.
Overall, the numbers don’t look good for Barnes & Noble, said Alison Cook, who is in client relations for Ford Equity Research. The company analyzes companies based purely on numbers as opposed to news.
Ford Equity Research ranks companies with one being the worst and 100 being the best.
“They’re ranking was a 4,” Cook said. “That’s a strong sell rating for the stock.”
But the reason for struggles might not be as simple as eBooks, Cader said.
Cader said overall online sales have a greater impact on brick-and-mortar book stores than eBooks because people are becoming more used to ordering physical and digital books online.
“The threat to them isn’t just eBooks, but it’s online selling in general,” he said.