Wedbush: Best Buy Lost Out On 'Few' Purchases During Mobile Site Outage

Webush analyst Michael Pachter in a note Sunday commented on Best Buy Co Inc's BBY mobile site outage.

Pachter believes that Best Buy saw a surge in mobile traffic as consumers were rushing to seek price comparisons during Black Friday. The analyst adds that the traffic occurred within a "short window of time" causing company servers to "overload based on a limited, but likely reasonable" capacity level.

"Given the fact that the servers were down for approximately an hour and a half on the morning of Black Friday, and given our view that the bulk of the website searches were for price comparison purposes, we suspect that Best Buy lost out on few Internet purchases during that time," Pachter wrote. The analyst adds that Best Buy's site outage may have "slightly" benefited other retailers such as Target Corporation, Wal-Mart and Amazon.com.

Pachter also observed that Best Buy's site crashed again in the evening, creating a "high-class problem" and indicating the company is not spending enough on IT solutions to compete with its "more dependable" online competitors.

Pachter notes that the two crashes has resulted in him questioning if Best Buy's cost-cutting measures over the past few quarters has impacted its ability to maintain its website during heavy traffic periods.

The analyst concludes that it is now "very clear" that Amazon holds a competitive advantage in online selling and that "we do not think that BestBuy.com will ever be able to compete effectively."

As such, Pachter expects Amazon to continue gaining market share over Best Buy given the online-only retailer's "greater flexibility" and "far more reliable online presence."

Shares of Amazon are Neutral rated with a $330 price target.

Shares of Best Buy are Underperform rated with an $18 price target.