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Overstock Loses Its Sheen following Dismal 4Q17 Results


Mar. 22 2018, Updated 7:31 a.m. ET

Dismal 4Q17 drags on price

Overstock (OSTK) has fallen 0.8% as of March 19, 2018, following its announcement of its 4Q17 results after the market closed on March 15. The company’s bottom and top lines came in below analysts’ estimates, sending the stock’s price plunging 5.2% on March 16.

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Highlights of the earnings announcement

Overstock’s CEO, Patrick Byrne, named Wayfair as a big competitor on the company’s 4Q17 earnings conference call, calling it the “elephant in the room.”

More importantly, there was no update on the company’s decision to sell its retail arm to fund its blockchain ventures. Investors were also wary as the company said it faced an impending SEC (Securities and Exchange Commission) investigation pertaining to tZERO’s ICO (initial coin offering).

ICOs are alternative means of raising funds by offering a sale of new digital coins. ICOs have become fairly popular since cryptocurrency’s entry into the limelight. However, the fast-growing ICO market has prompted higher scrutiny by regulatory authorities.

YTD movement

The spotlight on Bitcoin and other cryptocurrencies last year helped Overstock to report a 265.1% rise in its stock price. However, 2018 didn’t start well for Bitcoin and other cryptocurrencies. Tightening regulations across the world, a South Korean Bitcoin exchange’s filing for bankruptcy, and Facebook’s banning cryptocurrency ads have created a downbeat sentiment toward cryptocurrencies.

On a year-to-date basis, Overstock has fallen 25.2% to $47.80 as of March 19, 2018. In comparison, e-commerce peer Wayfair (W) has fallen 4.7% to $76.53, whereas Shopify (SHOP) has risen 44.2% to $145.62.

One analyst’s stance

Following its 4Q17 results, Overstock has been rated as a “buy” by the only analyst covering the stock. Currently, the 12-month target price for the company is $100.00, which reflects a 109.2% upside as of March 19.

In this series on Overstock’s 4Q17 results, we’ll discuss the company’s revenue, earnings, and margins in detail.


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