Credibility Issues Mounting at Overstock... Are Viability Issues Next? (OSTK)

What matters more… A CEO who adequately predicted a very deep recession or a CEO who investors and analysts think may be a self-imposed victim of conspiracy theory?  Just go ask Overstock.com, Inc. (NASDAQ: OSTK) today.  On a day where there is such a negative surprise in earnings, the worries rule the roost.  We don’t care about a simple news summary here.  This is a situation of credibility and perhaps even about viability.

Overstock.com posted a loss of $3.4 million or -$0.15 per share in its fourth quarter.  A year earlier was earnings of $14.9 million or $0.63 per share.  Revenue was also 10% lower to $314.1 million.  Thomson Reuters had estimates of $0.45 EPS and $377.6 million.

Today’s drop seems extreme on the surface, but there are deep worries mounting here.  Having an online clearance store may offer little value even if it has tried to build brand loyalty.  Operating costs were higher and it suffered some from a Google penalty last year.

Overstock’s name for investors may now be considered Under-stock.  The market value for this company is now only $139.3 million according to Yahoo! Finance data.  The prior 52-week trading range was $6.34 to $17.04 and shares are down almost 13% at $6.00 late in the Friday trading session.

Shares are now worse off than they were at the peak-selling points in late-2008 and early 2009 in the recession.  That is far from the case at most retail and clearance stocks.  Ouch!  This company has to figure out how to get its model back on track.  If not, longer-term viability issues are going to arise above credibility issues.

Getting the news for the drop this morning was no easy task, and then the company issued a press release correcting the dial-in numbers for its earnings conference call replay.

JON C. OGG