Who doesn’t remember Radio Shack? It was once one of the most well-known and fastest-growing brands in the US and around the world. Where is it now? In short, they did the same mistakes as Blockbuster and MySpace. They simply could not adapt to a constantly changing world and to fierce competition. This article will bring the memory of the Radio Shack stock story back to life, highlighting its highs and lows. We will also take a look at other companies that replaced Radio Shack.
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Radio Shack Stock Story
What is the Radio Shack stock story? The story begins in Boston just over 100 years ago, in 1921. Two brothers from London living in Boston, Theodore and Milton Deutschmann, open their first retail and mail-order store.
They sold radio equipment, some of it outdated army gadgets. The company slowly expanded in the North East of the US, becoming a leader in electronics.
In 1939, they entered the music equipment market. Then in 1947, they opened the first audio showroom in the US, selling anything from amplifiers, speakers, etc. In 1954, RadioShack started selling its own equipment. In 1960, they had 9 stores, but they almost went bankrupt towards the end of the decade. They sold too much on credit, couldn’t collect, and had issues with the bank.
Fortunately, RadioShack was rescued by a … leather company?? In 1919, the Hinckley-Tandy Leather Company was formed. They sold leather shoe parts to repair shops in the Fort Worth, Texas area.
They eventually expanded their leather business and the business was sold to the American Hide and Leather of Boston. Fast-forward to 1963, RadioShack is bought for $300,000 in cash by the company, led by Chairman Charles Tandy.
Radio Shack Stock Story at Its Peak and Decline
RadioShack’s growth reached a new level in the ‘70s. They had numerous good quality products. Their technological breakthroughs were known countrywide and everyone was talking about them. In the ‘80s, they innovated their computers and brought them into our homes as well as a multitude of other tech products.
RadioShack reached its peak at the turn of the century. They had stores in five countries: the US, Canada, Australia, the UK, and Mexico. Their stock price even peaked at over $100. By 2010, they made several partnerships with Verizon, Sprint, and T-Mobile to sell mobile contracts.
Over 50% of RadioShack’s revenue came from mobile phones. Their gadgets sales began to decline. They were often praised for their exceptional customer service. RadioShack seemed like they were doing great, but in 2015 they went bankrupt after 11 consecutive quarterly losses.
What Happened?
Let’s continue with the Radio Shack stock story. RadioShack was unable to adapt to the changing dynamics of our world. They sold their own products but they weren’t competitive with other brands (Apple, Microsoft, etc.) and couldn’t adapt fast enough to an online world. RadioShack even aired a SuperBowl commercial in 2014 to remind us they still exist.
But it was too late by then. They had too many brick-and-mortar stores, often condensed in the same geographical area. Additionally, they didn’t have an adequate online presence. Consumers prefer to buy an item cheaper online and have it delivered to their doorstep than to have to commute to a store. By the time they set up a functional online store, it was too late. Furthermore, the company had managerial and financial issues. Between 2005 and 2014, 7 different CEOs tried to revamp the business.
Their loans didn’t help them much and their debt skyrocketed by 2015, which led to their bankruptcy. Those are several red flags that the company failed to address adequately and led to their demise.
Today
Let’s continue this Radio Shack stock story. In November 2020, Retail Ecommerce Ventures (REV) acquired RadioShack. REV buys struggling well-known companies (Pier1) and attempts to bring them back from the dead.
They believe that customers will go back to a brand they know rather than switching to an unknown brand. Personally, I haven’t heard of RadioShack in over a decade and I believe most people forgot about it completely. Even if I would come across a RadioShack laptop or cell phone, I highly doubt I would even consider purchasing it, would you?
Did REV’s business strategy work? It’s hard to say. RadioShack still has 400 stores in the US and Mexico but they operate independently of REV. When I visit their website, they are working on a cryptocurrency and there is a waitlist if anyone is interested (I’m definitely NOT).
Too many companies are trying to push their crypto, coin, or NFT and it sounds too desperate in some cases. Personally, I do not buy their comeback, but who knows, maybe it will work. Who replaced RadioShack?
Amazon (NASDAQ: AMZN)
Amazon started as an online bookstore in 1994. By 2004, it started shipping products. Amazon also expanded into cloud computing (AWS) and the e-book business (Kindle).
They were early movers, had an amazing strategy, and now dominate those markets. In 2011 they introduce their streaming services. Now, they sell their own products and became an essential business for many.
For every single product that RadioShack could sell in their stores, Amazon has it for cheaper and will deliver it quicker. They keep growing and getting better by the year. Amazon is a part of the Radio Shack stock story.
Amazon 2021 revenue: $110.8B
EBAY (NASDAQ: EBAY)
eBay began in 1995 when Pierre Omidyar auctioned his broken laser printer to a Canadian for $14.83. Their business kept increasing as they merged with PayPal, sold Skype, and hired many well-known individuals to their management.
eBay introduced different features on their website and generated income from different sources. More and more users began to bid and sell various items on their website. eBay isn’t as successful as Amazon but keeps generating profits. They used the expertise of successful people to boost their business and remain relevant despite the growing competition.
eBay 2020 revenue: $10.271B
Best Buy (NYSE: BBY)
Best Buy was founded in 1966 as an audio store called Sound of Music. They rebranded in 1983 specializing in consumer electronics. Sounds like, in 1983, they were quite similar to RadioShack. Best Buy made strategic acquisitions and partnerships in different countries to boost its international presence. They also have eight house brands. Their business model was very similar to RadioShack in its early days. Fortunately for them, they made smart business moves and kept up with an everchanging technological world to dominate the business.
Above are a few examples of companies who adapted their business model to a changing world and who are still relevant despite many obstacles. RadioShack lacked qualified management, strategic partners, diversified partnerships, and much more. They began their business over 100 years ago, had an early mover advantage, they were pioneers for a lot of technology used to this day, but could not compete with better brands.
Summary
To conclude this Radio Shack stock story, they were one of the biggest names of the 20th century and one of the biggest failures of the 21st century. Similar to Toys R Us. They failed to do smart business decisions and got devoured by the competition. Now, you know which red flags to look for in a business that is slowly becoming obsolete compared to its peers when looking for stocks to buy.
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