Shares of online retailer Overstock.com (BYON 11.65%) rose a quick 25% in early trading on April 29. That gain, however, didn't hold for very long. An hour into the trading day, the stock's gain had been cut roughly in half to around 13%. The driver here was a mixture of investor sentiment surrounding Overstock.com and the company's premarket earnings release.
Overstock.com has been an investor favorite of late, thanks partly to its digital currency ties via a subsidiary. Although the group that serves the blockchain space was spun off into a separate entity a couple days prior to earnings, there's still a material connection here, and emotions have run very high around the stock. Thus, dramatic price moves, including within the same day, have been common. So the price action in early trading, when put into context, isn't really all that odd.
That said, Overstock.com did put up some pretty impressive numbers in the first quarter of 2021. Revenues of $660 million were a massive 94% higher than the year-ago figure. Analysts had been looking for around $580 million, so it was a notable top-line beat. On the bottom line, the company earned $0.56 per share from continuing operations, up from a loss of $0.34 per share in the same stanza of 2020. The analyst call was well below what the company actually earned as well. Overstock.com clearly had a good quarter, and notably, the company stated that it believes it is "well positioned to sustain this profitable path through 2021 and beyond." So while there was no specific guidance, the tone here was very upbeat.
Yes, the first quarter of 2021 was a good one, and investors got whipped up about it, but there's another bit of background information to keep in mind. Specifically, the stock has risen by more than 1,000% from where it started 2020, before the coronavirus was a major issue. It's doing well right now for sure, but it looks like Wall Street has priced in a lot of good news. Long-term investors should probably tread with at least a little bit of caution here.