What Happened:
Shares of online home goods retailer Overstock (NASDAQ: OSTK) fell 8.59% in the pre-market session after the new Bed Bath & Beyond brand operated by the company provided estimated revenue and expense metrics for the third quarter of 2023 (from July 1 to September 4).
According to the report, revenue showed a mid-teens percent decline year on year. This decline includes a low-double-digit percent decline since the U.S. launch. The average order value also declined by a high-teens percent year on year, while orders grew by a mid-single-digit percent.
It is worth noting that Overstock completed the acquisition of the Bed Bath & Beyond brand and other intellectual property on June 28, 2023. The company launched as bedbathandbeyond[.]ca in Canada on June 29, 2023 and as bedbathandbeyond[.]com in the U.S. on August 1, 2023. Results prior to these launch dates reflect the performance of the prior overstock[.]ca and overstock[.]com websites.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Overstock? Access our full analysis report here, it's free.
What is the market telling us:
Overstock's shares are very volatile and over the last year have had 41 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was three months ago, when the stock gained 9.22% on the news that the company bid $21.5 million for Bed Bath & Beyond intellectual property assets, such as mobile application rights (stores would not be part of the deal). Some of the assets potentially acquired in the deal could help to realize cost-effective ways to boost sales and improve customer acquisition.
Overstock is up 8.85% since the beginning of the year, but at $20.61 per share it is still trading 45.6% below its 52-week high of $37.86 from August 2023. Investors who bought $1,000 worth of Overstock's shares 5 years ago would now be looking at an investment worth $814.67.
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