What happened

Shares of online retailer Overstock.com (BYON 1.71%) rose dramatically in early trading on Thursday and were up by nearly 20% in the first hour or so of trading. There's no question what drove investor enthusiasm, as the company released its third-quarter earnings report.

So what

Overstock's earnings per share came in at $0.63, well above analyst expectations of $0.47. This is important because sales were lower by 4% year over year, dropping from roughly $718 million in the third quarter of 2020 to $689 million in the same period this year. But that has to be put into context, because 2020's sales results were driven by a consumer shift toward online shopping during the pandemic. 

Two men sitting on a bed looking at a computer.

Image source: Getty Images.

What's interesting is that Overstock's active customer count increased 5% year over year, suggesting that new customers who found the online shopping site during the pandemic have stuck around. That said, the average orders delivered were down 22%, but that makes sense given that the global economy has been, perhaps haltingly and slowly, reopening. Notably, the average order size was up 24%, and half of the company's orders came from a mobile device.

All things considered, even given the top-line drop and decline in deliveries, Overstock's third quarter was a good one.

Now what

Shareholders were right to be pleased with today's results. But context is important with the stock price, too. Since the start of 2020, before the pandemic hit, the company's shares are up over 1,200%. That's a massive price move in a fairly short period, with some pretty wild ups and downs along the way, suggesting that some caution is probably in order here.