Why Is Overstock (OSTK) Up 27.2% Since Last Earnings Report?

It has been about a month since the last earnings report for Overstock.com (OSTK). Shares have added about 27.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Overstock due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Overstock.com Q2 Earnings & Revenues Jump Y/Y

Overstock.com reported second-quarter 2020 earnings of 84 cents per share against the year-ago quarter’s loss of 69 cents.

Further, revenues of $782.5 million jumped 109.4% year over year.

Quarter Details

Retail revenues (98% of revenues) were $767 million, up 108.7% year over year. Moreover, other revenues (2% of revenues) were $15.6 million in the reported quarter, up 150%.

tZERO revenues soared 129.5% year over year to $12.7 million. MVI revenues were $2.9 million compared with year-ago quarter’s revenues of $0.7 million.

Retail gross merchandise sales jumped 114.1% year over year to $1 billion. Home furnishings were 92.5% of second-quarter sales.

Markedly, growth in new customers was more 205% year over year in the quarter under review. Moreover, new-customer repeat-purchase rate increased 16%.

Gross margin expanded 320 basis points (bps) year over year to 23% in the reported quarter.

Sales & marketing (“S&M”) expenses surged 130.9% year over year to $79.8 million. As a percentage of revenues, S&M expenses were up 90 bps year over year to 10.2%.

Technology expenses were $33.7 million, up 1.6% year over year. As a percentage of revenues, Technology expenses decreased 460 bps to 4.3%.

General & administrative (“G&A”) expenses decreased 14.4% year over year to $27.4 million. As a percentage of revenues, G&A decreased 510 bps on a year-over-year basis to 3.5%.

Adjusted EBITDA was $41.8 million against adjusted EBITDA loss of $13.1 million.

Operating income was $39 million against the year-ago quarter’s operating loss of $25.8 million.

Balance Sheet

As of Jun 30, 2020, Overstock.com had cash and cash equivalents worth $321.2 million compared with $143.9 million as of Mar 31, 2020.

Long-term debt as of Jun 30, 2020 was $43 million compared with $43.7 million as of Mar 31, 2020.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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