Overstock (BYON 0.67%) shareholders lost ground to a declining market this week as the stock fell 8% through Thursday trading compared to a 2% slump in the S&P 500, according to data provided by S&P Global Market Intelligence. The drop pushed the e-commerce retailer further into negative territory for the year, down about 50% since the start of 2022.
It was sparked by increasing fears on Wall Street about a tough selling environment ahead for the home furnishings retailer.
That difficult environment is already starting to hurt Overstock's business. The company announced in late April that sales fell 19%, more than management had predicted, in the fiscal first quarter. Overstock saw a 26% decline in active customers, plunging order values, and declining order counts per customers.
While each of these metrics had been elevated last year by pandemic-related shopping behavior changes, it was still jarring to see Overstock endure a 33% decrease in order volumes through late March. This week's stock price decline can be tied to investors' concerns that a recession is on the way that would further pressure the home furnishings industry.
Overstock didn't lose money in Q1, which suggests the business can weather any pullback by consumers. "We believe our unique business model positions us favorably to navigate through various macro scenarios," CEO Jonathan Johnson said in a late April press release.
The current investing climate has many investors moving toward the perceived safety of dividend-paying stocks and consumer staples, though, which typically perform well through any environment. Since Overstock is located in a consumer discretionary sector that's already shrinking, shares are likely to fall harder than the wider market when concerns flare up about an impending recession.