Why Shares Plummeted

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of (NASDAQ: OSTK  ) were getting moved to the sales rack today, falling as much as 17% after a disappointing earnings report this morning.

So what: The online retailer showed solid improvement on both top and bottom lines as revenue increased 18% to $301.4 million, in line with estimates, and net income grew 31% to $0.14 per share, missing estimates by a penny. While those numbers were certainly respectable, the market seemed to have gotten its hopes up after three straight quarters of solid earnings beats. Management credited the sales improvement to the new Club O loyalty rewards program, a similar offer to Amazon Prime, and also noted improved delivery times on the East Coast because of its new warehouse in Pennsylvania.

Now what: Shares of are still up more than double from their price this spring as the stock soared after an impressive first-quarter earnings report. Today's sell-off seems to be more of an indication that the stock had been overbought than any particularly weakness in its report. Operating in Amazon's shadow, it seems like the company will struggle to deliver significant profits as long as Amazon is willing to offer rock-bottom prices, and a P/E near 26 means the stock isn't a bargain. I'd look elsewhere.  

What does Amazon have that Overstock doesn't?
Find out in our special free report "3 Companies Ready to Rule Retail," which explains why Amazon and two other companies are poised to dominate the retail space for decades to come. Uncovering these top picks is free today; just click here to read more.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2688070, ~/Articles/ArticleHandler.aspx, 9/25/2016 6:36:29 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 4:00 PM
OSTK $15.48 Down -0.14 -0.90% CAPS Rating: *