Have a look at Radio Shack (RSH). Price: $0,24. Wow, pretty impressive eh? A very cheap stock you think, but no way. Radio Shack said to file for bankruptcy yesterday (chapter 11). I wrote about Radio Shack in an article called «retailer dead», 11th March, 2014, so this is no surprise. RadioShack have $1,2 billion in assets and $1,39 billion in debts. As widely expected: RadioShack is finish. Sorry shareholders. Everything is lost.
What`s going on? What we see now is just the start of a new era; The new economy. This is something we talked about in the late 90`s and early 2000`s. everybody was talking about the new economy at that time, and investors bid up stock prices to unprecedented highs.
You all know the end of that history. The investors didn`t look at macroeconomic factors at that time, and it all blew up to a gigantic bubble. A tech bubble. And that bubble has long since burst. Since then many companies have remained very innovative.
Many companies in the new economy are heavily involved in the internet and biotech industries, and the ripple effects of the new technologies has spread out to all other industries as well. But obviously not to Radio Shack.
When I wrote about the retailer dead in my article last year, Radio Shack was down -38,5%. I said they were doomed, and things have changed. It`s all about time and money. Why take the bus to the shop in town and buy a product that is twice as expensive as the same product on Amazon, Ebay, Best buy or Wal-Mart?
I also wrote about it in 2013. This will affect other shops like Starbucks, and their sales was declining in the holiday season in 2013, and this is just the beginning. I think we will see this trend spread all around the world. Fast.
RadioShack`s business model failed last year and they had no reason to open the doors and throw good money after bad money. The time is over for RadioShack. Just like Mervyn`s, who had 189 stores in 10 states. Mervyn`s was the eight-third largest retailer in the U.S based on 2005 revenue. Many of the company`s stores were in shopping malls.
Mervyn`s closed the doors December 31, 2008, but the Morris family having bought back intellectual property rights to the company in 2009. They are planning to relaunch Mervyn`s as an internet-based enterprice. The new economy is here.
It is the high-tech tools like internet and powerful computers which is penetrating the consumer and business marketplace that really drives the new high growth industries. The tools are getting better and better. Add sharing economy and driverless cars to this and the new economy is here to stay.
If your shopping mall in your town is crowded today, it may change tomorrow. At one time it can be more employees than customers, and bookstores are the first to fail. Clothing chains will follow, consumer electronics stores, air-ticket booking offices and in the future; bank branches and other traditional services facilities will follow. The impact from online sales is massive.
Alibaba`s Jack Ma said they have created 14 million new jobs. McKinsey said the shift online could contribute up to 22 percent of the China`s productivity growth by 2025 and make up 7 percent to 22 percent of the total increase in GDP from 2013 to 2025.
Clashes between the old and new economies will intensify.
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