Amazon is receiving lots of bad press in its dispute with Hachette Book Group, but executives and investors are likely more concerned that its stock price has been slipping since the beginning of the year. In the first six months of 2014, Amazon’s stock fell by a little more than $74, down 18.5% from its end-of-2013 level, the largest drop among the 14 companies listed on the PW Stock Index. Despite continuing to post huge quarterly revenue gains, Amazon’s profits are slim; its battle with HBG and other vendors is believed to be, at least in part, an attempt to improve the company’s margins.
With the Amazon decline, the PWSI fell 10.2% in the January–June 2014 period. Excluding Amazon, the PWSI rose 1.5%—the same increase posted by the Dow Jones Industrial Average during the first six months of the year. Barnes & Noble and Hastings Entertainment posted the best performances on the index. B&N’s stock price, which was up and down during much of the first half of 2014, started the second half with a rush, as the company announced in late June that its board approved a proposed restructuring that will split the company into two separate businesses: Retail (which includes B&N’s trade bookstores) and Nook Media (which includes the Nook and B&N’s college bookstores). Investors hope that with the trade stores free of the money-losing Nook operation, B&N will regain firmer financial footing, which, in turn, will lift its share price. The increase in Hastings’s stock price was due entirely to a takeover proposal from Joel Weinshanker, a major Hastings shareholder, who offered to buy outstanding shares of the company’s stock for $3 each. In spite of a few delays, the deal is expected to be completed later in July.
The company on the index with the biggest stock price increase during the first six months of the year was Educational Development Corp., which had a solid fiscal 2014—a result that its executives said was due, in part, to its 2012 decision to stop selling through Amazon.
Other PWSI losers included two printers: the stock prices of R.R. Donnelley and Courier Corp. fell 17.5% and 16.4%, respectively. Chegg, which began as an online textbook rental service but has since added other services for students, saw its stock price fall 17.3% in the first half of the year, as investors remained concerned that it will have difficulty competing with larger companies in the textbook rental space.
Publishers Weekly Stock Index January–June 2014
|Company||Dec. 31, 2013||Jun. 30, 2014||% Change|
|Barnes & Noble||14.95||22.79||52.4%|
|Educational Dev. Corp.||3.07||3.95||28.7|
|Houghton Mifflin Harcourt||16.96||19.16||13.0|
|John Wiley & Sons||55.20||60.59||1.0|
|Publishers Weekly Stock Index||678.09||608.81||-10.2|
|Dow Jones Industrial Ave.||16,576.66||16,826.60||1.5|