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Why Overstock Shares Jumped Thursday

By Daniel Sparks – Updated May 9, 2019 at 4:46PM

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The online retailer is still losing money. But a few items have investors upbeat.

What happened

Shares of online retailer and blockchain technology company (OSTK -0.04%) shot higher on Thursday, rising 11.3% by the time the market closed.

The stock's gain came after Overstock's first-quarter earnings release, which included better-than-expected revenue and an improved outlook for the company's retail business.

A chart showing a stock price moving higher

Image source: Getty Images.

So what

Overstock reported first-quarter revenue of $368 million, down 17% year over year. On average, analysts were expecting revenue of $361 million. The company's net loss per share of $1.18, however, was worse than the loss of $0.93 analysts were expecting.

Free cash flow during the first quarter worsened year over year from negative $14.2 million in 2018 to negative $55.6 million in 2019.

Now what

Looking ahead, Overstock said it now expects its adjusted EBITDA from retail in 2019 to be $15 million, up from a previous forecast of $10 million. This will be driven primarily by aggressive cost-cutting.

In the first-quarter earnings release, management said:

Our expense management has been aggressive. We have taken a tremendous (>25%) amount of cost out of our expense structure in the last 5 months. We are lean and fit as an organization.

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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