Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our thesis.

What: Shares of Overstock.com (NASDAQ:OSTK) were getting tossed today, falling 22% on a disappointing earnings report.

So what: Like many offline retailers, the online merchant struggled through the holiday season, though its top-line result actually beat expectations as revenue grew 16%, to $397.6 million, ahead of expectations of $396 million. Profits, however, took a beating, as spending increased disproportionately on sales and marketing, and the company barely broke even with adjusted earnings of $0.04, well below expectations of $0.52.

Now what: Management did not provide any commentary, but it's no surprise that shares fell so sharply after such a steep earnings miss, especially during the all-important holiday season. The additional sales and marketing expense is notable, as that additional push did not help the performance during the crucial quarter, though arguably it could build sales over the long run. As a small player in the online retail world, Overstock may be stuck between a rock and a hard place. Amazon.com seems like it will always be the big bully of online retail, and this past quarter's "highly promotional" environment among traditional retailers indicates that brick-and-mortar players are willing to be just as cutthroat.

Even Amazon disappointed the market after hours on a weak forecast, showing that tough times may be ahead for Overstock.