For most investors, how much a stock's price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you'd invested in Overstock.com (OSTK) ten years ago? It may not have been easy to hold on to OSTK for all that time, but if you did, how much would your investment be worth today?
Overstock.com's Business In-Depth
With that in mind, let's take a look at Overstock.com's main business drivers.
Overstock.com is primarily an e-commerce service provider. The company sells its broad range of price-competitive products, including furniture, home decor, bedding and bath, and housewares through its www.overstock.com, www.o.co and www.o.biz websites.
Overstock reported revenues of $2.55 billion in 2020. Retail business contributed 98% of revenues.
Overstock’s retail business’ goal is to provide goods to furnish and accessorize dream homes for its consumers at bargain prices. Markedly, home furnishings were more than 90% of the company’s fourth-quarter 2020 sales.
Moreover, this Midvale, UT-based company entered the blockchain-technology space in 2014. Overstock pursues its blockchain endeavors through two businesses namely Medici Ventures and tZERO.
Medici Ventures owns the majority of tZERO’s business and has minority investments in several blockchain-related companies catering to identity management, property rights and management, central banking and currencies, capital markets, supplychains and commerce, and voting systems.
Meanwhile, tZERO is a financial technology company focused on development and adoption of digital securities based on the bloackchain technology. The company’s subsidiary tZERO ATS operates an alternative trading system (ATS) that provides a licensed venue for matching buy and sell orders to its broker-dealer subscribers.
Additionally, tZERO subsidiary SpeedRoute provides connectivity to its registered broker-dealer customers to U.S. equity exchanges and off-exchange sources of liquidity. Through its joint venture with BOX Digital Markets, tZERO also intends to develop a U.S. national securities exchange facility that will support trading in security token.
The company’s other businesses include Crypto, Inc., a cryptocurrency wallet and exchange-services business, and Verify Investor, an accredited investor-verification company.
Further, tZERO formed tZERO Markets in May 2019 to offer certain brokerage, investment banking, placement agent and best-efforts underwriting services for traditional equities and digital securities. The service is yet to gain regulatory approval.
Overstock faces stiff competition in home furnishing and e-commerce space from the likes of Wayfair, Amazon, Walmart, Target and others.
Anyone can invest, but building a successful investment portfolio requires research, patience, and a little bit of risk. So, if you had invested in Overstock.com ten years ago, you're likely feeling pretty good about your investment today.
A $1000 investment made in May 2011 would be worth $5,361.45, or a 436.15% gain, as of May 18, 2021, according to our calculations. Investors should note that this return excludes dividends but includes price increases.
The S&P 500 rose 213.27% and the price of gold increased 19.99% over the same time frame in comparison.
Going forward, analysts are expecting more upside for OSTK.
Overstock.com is benefiting from solid demand for its e-commerce services amid coronavirus-led lockdowns and shelter-in-place guidelines. The company’s refreshed focus on home furnishing vertical has been the major growth driver in the near term. Markedly, online penetration of home furnishings jumped significantly during lockdowns. The home furnishing space is expected to continue to grow as the housing sector recovers, with rising affluence in specific demographics, driving demand for home-goods items. Shares have outperformed the industry year-to-date. Nevertheless, stiff competition, particularly from Wayfair, its nearest peer in home furnishing, is a concern. Moreover, tZERO business is expected to run at a loss for the foreseeable future as blockchain will take more time to gain widespread adoption.
Shares have gained 8.24% over the past four weeks and there have been 2 higher earnings estimate revisions for fiscal 2021 compared to none lower. The consensus estimate has moved up as well.
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