Overstock.com (NASDAQ:OSTK) recently reported very strong third-quarter results and is growing rapidly, indicating that it’s still on track to becoming a significant competitor to Amazon. With OSTK stock plunging on Nov. 9 after Pfizer (NYSE:PFE) announced positive trial results for its vaccine for the novel coronavirus, now is an excellent time for long-term investors to buy the shares.
In Q3, Overstock’s retail sales soared 111% year-over-year to $718 million, while the number of customers it had during the quarter jumped a huge 141% YOY. Moreover, the company’s retail gross profit soared by $100 million YOY, reaching $69 million, and its retail gross margin increased almost 3.5 percentage points YOY to 23.5%.
Finally, Overstock’s bottom line was positive for the second straight quarter, as its net income came in at $43 million and it reported EBITDA, excluding certain items, of $50 million.
Also important to note is that the number of customers who made more than one purchase on the website within a 28-day period jumped 19% YOY, and the number of average monthly visitors to the company’s website reached a very impressive 59 million.
A Closer Look at OSTK Stock
Clearly, the number of people buying home furnishings (Overstock’s specialty) is soaring, and the company has been a big beneficiary of that trend.
Although the launch of the vaccine for the coronavirus is likely to slow Overstock’s tremendous growth somewhat, the company’s revenue and customer count will probably continue to jump anyway.
During the pandemic, e-commerce in general and buying furniture online in particular have become much more popular in the U.S. and elsewhere.
“We’ve seen a significant spike and now estimate 35% of home furnishings are being purchased online,” said Overstock CEO Jonathan Johnson.
Since, when it comes to shopping, people are very much creatures of habit and buying things online is quite convenient, I believe that the proportion of home furnishings bought via e-commerce is likely to be at least 30% after the pandemic is over.
Providing evidence for that view, Johnson noted that Overstock generated its gigantic Q3 growth even though many brick-and-mortar furniture stores had reopened across the U.S. last quarter.
Positive Catalysts for OSTK Stock
With cyberattacks becoming a bigger problem amid the work-from-home trend, Overstock’s Medici subsidiary, which focuses on blockchain technology, is likely to do very well in the coming quarters and years. Blockchain has multiple attributes that make it highly secure.
After the value of Bitcoin recently jumped, Overstock’s tzero website, which enables the exchange of cryptocurrencies is likely to surge in popularity in the near-term (tzero is part of Medici).
And with Joe Biden, who has promised to spend many hundreds of billions of dollars on new programs, having been declared the winner of the presidential election, worries about the dollar’s weakness are likely to keep Bitcoin and other cryptocurrencies trending high for the foreseeable future.
Consequently, tzero’s popularity is likely to meaningfully increase over the medium-term and the long-term.
Finally, another Medici subsidiary, Voatz, “has developed a mobile voting app that utilizes the built-in security, smartphone technology and the immutability of the blockchain to enable safe and secure voting,” according to Johnson, Overstock’s CEO.
He added that the app has facilitated “70 successful elections in 29 counties across 5 U.S. states.” Given the widespread allegations of voter fraud in the 2020 U.S. presidential election and the difficulty of refuting those charges, Voatz has a promising future.
The Bottom Line on Overstock
Overstock grew very rapidly in Q3, showing that the company’s marketing is strong, while its retail website is very well-liked. Despite the probable launch of a coronavirus vaccine going forward, its retail website is likely to continue to become much more widely used. Meanwhile, it has a few other promising ventures.
With OSTK stock trading for just over one time analysts’ average 2021 revenue estimate for the company, I recommend that longer-term investors buy the shares.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Larry has conducted research and written articles on U.S. stocks for 13 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Among his highly successful contrarian picks have been solar stocks, Roku, Plug Power, and Snap. You can reach him on StockTwits at @larryramer. Larry began writing columns for InvestorPlace in 2015.
