Apple Sets Value Record; Best Buy Bombs

Matt Nesto analyzes the day's business headlines.
3:00 | 08/21/12

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Transcript for Apple Sets Value Record; Best Buy Bombs
They have at the opening bell this Tuesday August when he first hello everyone I'm Tanya Rivero in New York futures were up this morning on optimism that Europe can in fact tackle its debt crisis. Here to discuss the top business headlines at this hour is not -- -- co host. A break out on our partner Yahoo! finance good morning Matt read to you. You -- thank you very much from me so let's -- best buys tumble the stock was down nearly 10% in premarket trading and that's after a 10% drop yesterday. Does this sudden -- makes sense. In a way it does right because the stock had -- a little bit off a recent lows based on the fact that the founder of the company Richard shall also was looking to take it private. And then we saw Monday the announcer they were shining. As they have sort of been kinda hinting -- there shunning. That a takeover effort by hiring their own takeover CEO -- new CEO and then today. We get weaker than expected earnings and sales and that no guidance which to really isn't a surprise but I think that -- just sort of people saying we need to get that here were don't know what this -- got to look like. But right now there's just a lot of uncertainty in the face of what best buy is gonna do to try to get its sales going. To defend though -- -- and people are gonna kill me for this. But the truth of the matter is as best buy sold -- over ten Billy. -- dollars in sales in the last ninety days which is something only a handful. Of retailers. -- do I -- Amazon -- about twelve billion in sales -- -- just to -- -- and -- -- argument and I know it's all about sales growth but that's still pretty good basis sales to work with so they -- get it right they do have a lot of customers that like best -- -- investors right now. Well I was gonna say though should -- that investors look at this as an opportunity. No. -- -- -- You could see the volatility of I -- get. So these days are looking at and only get today's the day you necessarily one of diamond and they did separately and so look at in -- listening to what the company pesticide. -- -- to pay attention there are as of yesterday afternoon apple became the most valuable company in history. How can investors tell they're still any upside to this stock it's probably only valued at this. Why didn't you but you know -- that the thing that has sort of played apple all along or kept people in it is the fact that it's. Valuation. Of the multiples. Time sales times earnings times cash flow that it trades that aren't huge they don't have the highest multiples. Wall Street I mean there. Multiples compared elect a FaceBook for example are. Down right average. And so the only thing that struck me on this is the Colombian. Columbia Journalism Review put out a story saying well you know what it actually take it did it take inflation. Into the fact IBM. Was worth one point three trillion dollars almost twice as much. In 1967. On an inflation adjusted basis so they're saying yes no apple is the biggest company of all time. Makes -- -- headline but it may not be entirely accurate. Context is our friend -- go -- when you brought up Facebook's let's let's go there when a Facebook's early backers. -- -- has hashed out most of his shares. Should other shareholders be taking -- as a sign. Yeah yeah. Have to mean you have to remember though this guy Peter -- whose famous self for his role in the movie to -- in the early initial you know investor 500 -- put in to FaceBook in 2004. So clearly. He invests differently private investment direct investment he doesn't want to be exposed to market risks and you know reactions their earnings. Results and analyst upgrade it doesn't want any of that so he's investing with a different. A different mindset. He had that mindset going FaceBook -- so something's happened since -- Before it went before it went public he invests in private companies pre IPO companies. As to the people who give his fund money so he simply doing what he's supposed to do which is. You don't find them that the next FaceBook that sort of thing he doesn't want to be a subjected to market risk because that's sort of big. If you look at what the stock is that we seem to have hit some sort of a floor twenty dollars a share will the November lock up period which is five times as big as what we went through last week be a volatile -- volatile thing you betcha. No question about it -- don't want to read too much into one shareholder. Selling out he sold -- -- shares on the IPO. On the first day and then what that's the next available opportunity -- all the time more he kept a little bit but the truth of the matter is he's getting his profits out of this I would say smartly -- But why now -- he must feel like there's no more upside. Could be helped by a little bit now. That -- because he could. That's why I -- here -- absolutely could have stated there is enough life Facebook's W buddy for her that's -- what he's not a stock market guy Wednesday. Pre IPO valuation guide arrogant and I guess read too much into into him. He -- 500500000. Dollars into a billion that's a pretty darn good tracker. -- -- -- -- Look -- that Nike in the air using LeBron James to break a new barrier over 300 dollars for -- parents need current. -- do you think. Right now there's a market. -- Well they certainly thinks so and the funny thing is is that they're kind of in a price seeing back. Battle with the -- is they're all facing rising material costs and rising labor costs. And then -- profit margin which is the amount of money. That separates the cost of making your product and what you get from selling it the profit margins are under pressure they want to hold those up so they are increasing prices. Not only on flagship brands like -- LeBron hi tech. Electronic sensor sneaker. But on other brands as benign as the canvas chuck Taylor which Nike -- not long ago. If you take a look at the broader industry and what's going on there is some push back -- this -- -- there's a guy and YouTube. Who's out there organizing this sneaker community that would stand in line. Outside of buffalo locker something on the opening day to -- to boycott this to protest. Nike for its part is actually giving guidance to stores to make sure that they -- prepared for crowd control which. I sometimes wonder is that actually -- -- are they trying to create some sort of -- hype. -- ahead of this event is supposed to take place in the fall. I guess time will tell us whether people will -- these -- -- over 300 bucks. I appreciate -- news crew car headed Matt let's say one more look at the Dow right now up about thirteen points knots about all right thank you so much Matt --

This transcript has been automatically generated and may not be 100% accurate.

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