Overstock.com (OSTK) Stock: Why It Surged Today

By Amit Chowdhry ● Feb 23, 2022
  • The stock price of Overstock.com Inc (NASDAQ: OSTK) increased by over 21% during intraday trading today. This is why.

The stock price of Overstock.com Inc (NASDAQ: OSTK) increased by over 21% during intraday trading today. Investors are responding positively to a couple of catalysts. This includes the company’s Q4 2021 and FY 2021 results along with news from tZERO Group, which is a company that features Overstock as a direct investor.

Q4 2021 Financial Highlights

— Total net revenue was $613 million, a decrease of 9% year over year

— Gross profit was $139 million or 22.7% of total net revenue

— Income from continuing operations was $33 million

— Diluted earnings per share was $0.68

— Adjusted EBITDA (non-GAAP) was $27 million, which represents 4.5% of net revenue

— At the end of the fourth quarter, cash and cash equivalents totaled $503 million

Full Year 2021 Financial Highlights

— Total net revenue was $2.8 billion, an increase of 11% year over year

— Gross profit was $624 million or 22.6% of total net revenue

— Income from continuing operations was $172 million

— Diluted earnings per share was $3.57

— Adjusted EBITDA (non-GAAP) was $142 million, which represents 5.1% of net revenue

— Full year net cash provided by operating activities was $98 million

tZERO News

tZERO — a leader in blockchain innovation and liquidity for digital assets — announced that its broker-dealer subsidiary tZERO ATS successfully launched support for clearing and settlement securities transactions for itself and its broker-dealer affiliates on February 22, 2022, a key milestone for tZERO’s next-generation trading ecosystem. And tZERO’s broker-dealer subsidiaries are now able to independently onboard additional private securities at a faster pace, accelerate the settlement times of transactions on its private security trading platform, and improve the user experience in transferring cash and securities to and from third-party platforms.

This clearing and custody model supports the current and future private digital securities that trade on the tZERO ATS — which are uncertificated securities with focused blockchain functionality to increase transparency. And it will also support NMS securities, which are public securities that trade on national exchanges.

Along with supporting traditional broker-dealer custody, tZERO expects, subject to regulatory approval, to implement parallel clearing, settlement, and custodial solutions to support digital asset securities, which are securities issued and settled on a blockchain, to its platform. And this solution will initially be implemented through user-directed settlement in partnership with a custodian and, later, in conjunction and in accordance with the Securities and Exchange Commission (SEC)’s statement that outlined how broker-dealers can engage with digital asset securities, including maintaining custody of these assets and settling on-chain without a clearing firm or a custodian.

Key Quotes About The Financial Results:

“This is our second consecutive year of profitability and market share growth. For the full year 2021, net revenue increased 11% against record 2020 growth. The foundational operational improvements we have made over the past two years have stabilized the business and positioned us well to navigate through economic- and industry-specific cycles over the long term. We are proving we can adjust to, execute through, and take advantage of both positive and negative jolts in the market. It’s encouraging that nearly one third of the overall home furniture and furnishings market continues to be transacted online. I believe increasing our brand association with home positions us favorably for 2022 and beyond. We remain committed to our value to ‘do good’ and recently launched a dedicated site outlining our ESG efforts (http://www.overstock.com/esg).”

“Navigating the operating environment in our industry during the fourth quarter was challenging,” continued Johnson. “Despite challenges, we were committed to delivering on our profitability targets—and we did just that, driven in part by our largest Thanksgiving through Cyber Monday—or Cyber Five—period in the company’s history. I look forward to providing additional updates on our fourth quarter and full year 2021 performance and sharing insights into our 2022 plans during our earnings call.”

— Overstock CEO Jonathan Johnson

Key Quotes About The tZERO Announcement

“Yesterday’s launch was successful and will significantly increase the velocity at which we can onboard new assets to the tZERO ATS, giving customers a greater variety of investment opportunities and enabling increased liquidity for private capital markets.”

“tZERO is committed to transforming the current trading infrastructure of digital assets to support next-generation capital markets and innovating the ways these assets can be custodied and transferred. Being able to support next-generation infrastructure and settlement and clearance systems in place today will propel operational efficiencies and bring value to both the company and its stakeholders.”

— tZERO Interim Chief Executive Officer and Chief Legal Officer Alan Konevsky

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.