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Why Shares of Overstock.com Fell Friday

By Daniel Sparks – Nov 9, 2018 at 6:58PM

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A wider-than-expected loss may have spooked some investors.

What happened

Shares of e-commerce company Overstock.com (OSTK 4.72%) fell on Friday, declining as much as 17.9%. But the stock ended the trading day down 15.5%.

The stock's decline follows Overstock's third-quarter earnings release. The likely driver for the stock's pullback on Friday was Overstock's worse-than-expected loss per share for the period.

A blackboard with a chalk sketch of a chart showing an arrow pointing down.

Image source: Getty Images.

So what

Overstock reported revenue of $440.6 million, up 4% from $424.0 million in the year-ago quarter. Revenue fell short of a consensus analyst estimate, but not by much. On average, analysts were expecting Overstock to report third-quarter revenue of $440.7 million. 

Overstock's net loss per share for the quarter was $1.55, wider than a loss of $0.03 in the year-ago quarter. This was a significantly larger loss than what analysts were expecting. On average, analysts expected a loss per share of $0.80 for the period.

Now what

The company's hefty loss comes as Overstock transitions away from what management calls "the 'accelerate at any cost and ignore the losses' standard Internet model" to a "rational economic agent model." As management was careful to note, this cut its pre-tax operating loss (when excluding some legal expenses) in half compared to its second quarter. Management expects "similar results" from these efforts in its fourth quarter.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Overstock.com, Inc. Stock Quote
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