by Ian Harvey
November 13, 2019
Overstock shares plummeted on Tuesday, with the stock dropping to its lowest level in more than seven years as it extended its longest streak of losses. Earnings missed expectations with a 21% drop in revenue.
But, members of “Stock Options Made Easy” are up 64% potential profit using options puts!
Salt Lake City, Utah.-based Overstock.com Inc (NASDAQ: OSTK) slumped to a seven-year low Tuesday after the online retailer reported a larger loss than expected as efforts to rein in marketing activities hurt sales.
The stock plummeted after the e-commerce company reported third-quarter results that missed expectations, and which featured a 21% drop in revenue from the prior year. It also filed for a possible offering of stock of up to $150 million of shares offered from time to time through a sales agent, JonesTrading, under a Capital on Demand sales agreement.
The stock dropped as much as 19% and was trading at its lowest level since July 2012. Shares were on track for their ninth straight daily decline, the longest losing streak since a 10-day drop that ended in October 2008. Overstock shares have lost about 24% of their value over the nine-day decline, and are down 70% from a September peak. Much of that selling was related to a cut forecast and the resignation of its chief financial officer.
Overstock.com closed trading at $7.78, down 17.41% on the day. The stock price continued to deteriorate in extended trading, down another 1.54% at $7.66.
The Earnings Report.....
Losses narrowed to 89 cents a share, from $1.55 a share in the year-ago period, but missed estimates for a loss of 56 cents a share. Revenue fell 21% to $347 million, short of estimates of $376 million.
The retailer blamed the loss on a plunge in product sales, driven by a sharp fall in marketing activities, which was part of its effort to return its retail business to profit.
Sales and marketing expenses fell 38% to $34.2 million in the quarter from a year earlier.
The U.S.-China trade war also proved a headwind during the quarter as search traffic was taking longer than expected to translate into buying customers amid waning consumer confidence.
The Trade That Was issued To members To Consider This Week…..
Overstock.com Inc (NASDAQ: OSTK), an online closeout
retailer offering discount, brand-name merchandise for sale over the Internet,
will report earnings before the market opens. The consensus estimate is for a
loss of $0.70 per share on revenue of $404.59 million.
Consensus estimates are for year-over-year earnings growth of 54.84%
with revenue decreasing by 8.17%.
In the second quarter of 2019, Overstock missed revenue estimates but
reported a narrower-than-expected loss. Revenue fell 23% to $373.7 million
while net loss amounted to $0.69 per share.
After five long years the Overstock.com share price is a whole 53%
lower. And the stock has fallen 46% in the last year. The falls have
accelerated recently, with the share price down 43% in the last three months.......read more.....
The Option trade to consider: Buy the OSTK DEC 20 2019 10.000 PUT at approximately $1.65.
Further Damaging Factors…..
The company and its stock had an eventful quarter, during which its Chief Executive Patrick Byrne dramatically resigned amid claims of deep involvement in international political conspiracies. Byrne sold all his stock - more than 13% of the company - within a three-day period.
His resignation was followed by that of the company's CFO Greg Iverson, and the collapse of plans for a "digital dividend."
Shares have fallen 31% in 2019, while the S&P 500 has gained 23%.
In January 2018, Overstock ramped up sales and marketing expenses to attract new customers and generate revenue growth, but abandoned this strategy a few months later in August.
“We significantly reduced spending in the sponsored search and display ads on social media marketing channels,” the company said.
Also, the potential offering is large relative to the size of the company overall; Overstock currently has a market capitalization of about $278 million.
The size of the offering “suggests the potential for a significant amount of dilution,” said Tom Forte, an analyst at D.A. Davidson, who added that the move was a “logical” one for Overstock to take.
“I don’t know if I should use the term ‘safety blanket,’ but this could be the bridge to a point in time where retail business generates enough cash flow to fund Overstock’s blockchain investments.”
Tom Forte currently has a buy rating on the shares, saying he viewed both the retail business and the blockchain business as undervalued.
YOU NEED TO BE IN TO PROFIT!
Join us today and see what future trades will be recommended!
But meantime.....Stock Options Made Easy “Earnings Predictions” members that entered the trade Monday are now up 64%.
The question remains: “Will we exit this trade now, or wait, and hope for more profits?”
What will “Stock Options Made Easy” advise members to do?
AS ALWAYS THE DECISION IS YOURS!
An Important Note: That any suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!