Amazon vs. Hachette: Stock prices
June 14, 2014 | 4:02 am
The favorite tea leaf of investors is, of course, stock price. If a stock price is rising, the company is probably headed for good things. If it’s falling, the company could be in trouble. And, of course, it also serves as the ball on the roulette wheel that tells you how much you’re going to gain or lose after you placed your investment bet.
So what does the stock market think of the Amazon/Hachette discussion? Forbes reports that, where Amazon is concerned, it doesn’t seem to be worried. In fact, if you look at the three month chart of its stock price, you see an interesting thing. Amazon stock had been on an overall downward pricing trend right up until May 8th, when the news about the Hachette squabble broke publicly and it hit its lowest price point in three months ($288.32)—though it only lost about $4 from its May 7th price of $292.71, so the news didn’t seem to affect its value by a huge amount. But since then, it’s been on an upward trend, and traded yesterday at $326.27.
But just look at what’s happened to Hachette’s parent company, Lagardere. On May 7th, it was trading at 31.12 Euros. On May 8, it was trading at 23.85. That’s a drop of more than 20%! Since then it’s been gaining and losing a Euro or two, but hasn’t moved appreciably from its new trading base of 24 to 25 Euros.
(Update: I’ve been told this drop in price is because of a coincidentally-timed dividend. It’s still a rather odd coincidence given the date.)
Not that this has stopped Lagardere from trying to woo investors. A slide deck from its May 28 Investor Day presentation is available from Lagardere’s web site, and The Passive Voice, J.A. Konrath, and Hugh Howey have had fun picking it apart, because it’s exactly the kind of tone-deaf corporate communication that the Cluetrain Manifesto inveigles against. Let’s be honest, when you start making statements like “Publishers need size and muscle in order to keep control over relations with authors, over pricing and distribution,” you’ve made yourself an easy target. If you’re relying on “size and muscle” to keep those pesky authors in their place, what does that say about your future as a publisher?
Of course, using stock price as an indicator has its limitations. Stock price can only tell you how badly people wanted that company’s stock at that point. It can’t tell you why. (As the above update makes clear for Lagardere.) Any number of things could account for Amazon’s performance. As Forbes points out, it’s been cutting some great deals for new exclusive content, and just a couple days ago it launched a new music service for Amazon Prime members. It’s also got a new presentation in the offing for next week, in which it is expected to launch a new smartphone—though what this has to do with Jeff Bezos’s favorite children’s book isn’t clear yet.
It reminds me of the Grand Fenwick novel The Mouse on Wall Street. Desperate to get rid of an unexpected windfall which has been causing unwanted changes in the tiny duchy’s lifestyle, the Duchess takes to choosing investment prospects by closing her eyes and jabbing the newspaper’s stock page with a pin. The problem is that when Wall Street sees the Duchess make these odd investments, it assumes she knows something they don’t and also invests, causing the stock prices to shoot through the roof and earning Grand Fenwick even more money. So, stock price isn’t everything.
Nonetheless, it’s pretty clear that all the negative press coming from Hachette partisans doesn’t seem to have harmed Amazon’s prospects—nor has it done much for Lagardere’s.