Why, Inc. Stock Jumped

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 dazzling the market today, climbing as much as 20% after the company delivered strong sales growth in its second-quarter earnings report.

So what: The online retailer saw revenue increase 13% in the quarter, to $332.5 million, beating estimates at $315.2 million as orders and average ticket both increased. Despite the better-than-expected sales growth, bottom-line results weakened as profits fell from $0.15 a share to $0.08, worse than the consensus at $0.10, as marketing expenses grew 23%. CEO Patrick Byrne noted that it was the company's 10th-straight-profitable quarter, and credited increased technology spending for the improved performance. 

Now what: While the revenue growth was promising, Overstock seems like it will never be much more than a bit player in online retail, as it competes directly with, and seems unable to meaningfully differentiate itself. Also, the recent revenue growth has come at a price, as Overstock has missed earnings estimates in its last four quarters. If the retailer can find a way to consistently deliver revenue and profit growth, I may become a believer; but to do that, the company needs a better way to stand out in a sea of online retailers.

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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!

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Jeremy Bowman

Fool since 2011. I write about consumer goods, the big picture, and whatever else piques my interest. Follow me on Twitter to see my latest articles, and for commentary on hot topics in retail and the broad market.

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