Overstock.com Stock Review (OSTK): Should I Buy It Now?

By Amit Chowdhry ● September 21, 2020
  • Looking for an Overstock.com stock review (NASDAQ: OSTK)? Here is some information to help you decide whether to add it to your portfolio.

Midvale, Utah-based online retailer Overstock.com (NASDAQ:OSTK) — which operates through Retail, tZERO, and Medici Ventures segments — is known for offering furniture, home decors like rugs and bedding, home improvement, and other related products. Overstock also offers business advertising products and services on its website. During the COVID-19 pandemic, Overstock.com has seen a surge in demand as the world has been shifting more towards online shopping.

One-Day Delivery Capabilities With New California Fulfillment Center

Overstock.com, Inc. (NASDAQ:OSTK) recently opened a new fulfillment center in Fontana, California in partnership with UPS Supply Chain Services. The new fulfillment center is further aligning Overstock’s logistical footprint with key customers, significantly improving shipping speed, providing more accurate delivery estimates as well as a quicker port to warehouse process.

“This California fulfillment center positions us to provide a better delivery process to our customers,” said Overstock.com Chief Sourcing and Operations Officer Ron Hilton. “Its close proximity to major ports, as well as its centralized location in one of our largest markets made Fontana ideal to create a more efficient bridge between our suppliers and our customers. I’m proud of our team’s effort as they continue to enhance the sophisticated and robust supply chain and operations process we have in place.”

Overstock’s focus on customers has centered the retailer on helping shoppers easily find the products they are looking for at a smart value and with easy delivery and support. And with customers in mind, Overstock operates strategically positioned fulfillment centers in Pennsylvania and Kansas in addition to its new California facility. These centers — when grouped with a network of thousands of partner warehouses across the country and proprietary fulfillment software — help ensure fast, accurate, and secure delivery to customers.

“Overstock prides itself on providing customers a fast, free and predictable delivery experience,” explained Overstock.com President Dave Nielsen. “As sales continue to grow with increased customer migration online, our new California facility improves the customer experience through faster delivery speed in one of Overstock’s largest markets.” 

The Fontana, California fulfillment center had commenced operations on August 3, 2020.

Financial Firms Reacting To Overstock’s Growth 

There has been a lot of activity from financial firms around the stock price of Overstock over the last month or so. For example, last week, D.E Shaw disclosed a stake of 5.1% in Overstock.com (NASDAQ:OSTK). The filing had listed D.E. Shaw as a passive investor. D.E. Shaw held just 270,000 shares at the end of Q2, compared to 2.2 million shares now.

Several analysts covered the stock within the last month as well:

8/17/2020 – Piper Sandler analyst Peter Keith initiated coverage of Overstock with an Overweight rating and a $140 target. Keith also noted that there are “seismic forces at work” that dramatically improved for the company’s profitability and sales outlook despite the company’s shares already being up over 1,200% at the time. Those forces included a well-time refocus of the business on its e-commerce home furnishings and a structural shift in home furnishing sales due to COVID. Keith found Overstock to be undervalued relative to other high-growth consumer tech companies.

9/16/2020 – Wedbush initiated with an Outperform on Overstock

9/16/2020 – Credit Suisse started Overstock with Outperform with a $91 price target

“Overall, we believe the stock offers unique relative value and profitability within the broader e-commerce/retail spectrum,” wrote Credit Suisse analyst Seth Sigman. And Credit Suisse is seeing “positive internal momentum and favorable external drivers, with positive long-term implications from this growth and incremental customer engagement.”

However, Bank of America started coverage of Overstock with a neutral rating earlier this month. Bank of America analyst Ryan Gee believes that the company’s potential profit inflection is already being baked into the share price so he assigned the company with a price objective of $78.

tZERO Names Former Nasdaq EVP John Jacobs to its Board of Directors

Today Overstock subsidiary tZERO — a leader in financial innovation and liquidity for private companies — announced that it has named former Executive Vice President (EVP) and Chief Marketing Officer (CMO) of Nasdaq John Jacobs to its Board of Directors as its newest member. Jacobs is known for his expertise in working with institutional investors, IPOs, and global public companies. Now tZERO’s board has five directors.

Jacobs is known for establishing and built the Global Index Group for the Nasdaq from the ground up, and created one of the largest ETF fund families in the world with the launch of Nasdaq’s Fund business, built on his creation of QQQ – the ETF tracking the Nasdaq-100 Index.

Currently, Jacobs serves as Chairman of Alerian, Founder and CEO of Q3 Advisors, LLC, Board Member of ProCure Funds and US Bank LiFT Board, and Executive Director of the Center for Financial Markets and Policy. And in addition to these roles, Jacobs is also an Adjunct Professor of Finance at the McDonough School of Business at Georgetown University.

Quotes About John Jacobs Joining

“I am pleased to welcome John to tZERO’s Board of Directors. John brings valuable experience in leading transformative projects in capital markets, which will play an important role in providing strategic guidance on tZERO’s growth strategy.”

— Jonathan Johnson, Chairman of Board of Directors at tZERO and CEO of Overstock.com

“John is an excellent addition to the board. He will bring highly relevant capital markets experience and relationships to our growing ecosystem.”

— tZERO CEO Saum Noursalehi

“I am thrilled to join tZERO’s Board of Directors and look forward to continuing to build on the successes that the tZERO team has achieved as it continues to build its innovative private asset liquidity platform.”

— John Jacobs

Overstock.com Stock Review (NASDAQ:OSTK): Should I Buy It Now?

In an analyst consensus report I have read, 1 analysts says strong buy; 5 say buy; 1 says neutral; 0 say sell; and 0 say strong sell. And here is how the stock has performed over certain periods of time:

1-Day: -2.3%

5-Day: -3.5%

1-Month: -39.6%

3-Month: +200%

6-Month: +1,891.7%

YTD: +962.4%

1-Year: +400.3%

2-Year: +170.52%

5-Year: +274.48%

Max (Since public debut in 2002): +400.38%

Based on the analyst reports and the stock performance over time, I am also bullish on Overstock for the long-haul. I plan to steadily increase my position at various price points using the buy-and-hold method. The stock being down about 40% in the past month could present a buying opportunity as I am projecting Overstock to see a solid holiday season.

Disclosure: I own a few OSTK shares. I wrote this article myself and I do not have any business relationship with any company whose stock I write about. I am not a financial advisor and all articles are my opinion. You should do your own due diligence and consider talking to a financial professional before investing.