Overstock.Com - A Bad Coupon Trip

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Contributor Since 2019

Former WSJ and II ranked sell-side analyst covering special situations and TMT.

Summary

  • Yesterday, OSTK CEO Pat Byrne abruptly resigned as CEO and Board member, claiming exposure to myriad political and governmental issues including a love affair with a jailed Russian spy.
  • Bulls argue that Byrne was the barrier to OSTK achieving its potential.  We agree, but we think the Company's potential is that of a penny stock.
  • OSTK's e-commerce business of furniture and accessories has zero chance of survival against W, AMZN, TGT, WMT and other giants.  $1.5BN top line is in rapid decline and burns cash.
  • Meanwhile, OSTK's crypto unit looks like an air sandwich, with a crypto trading app boasting only 1K downloads and a "premiere" T0 token trading platform with no inventory, customers, or material pipeline.
  • We recommend investors liquidate positions of OSTK.  The "new" CEO - a  Board member - is just as responsible if not more so than Pat Byrne for the failures of the Company due to negligence.  Though OSTK may run out of cash this winter, we peg fair value at 0.1x sales ($150MM) + $1/share stub for crypto = $5/share.

We will flesh out this analysis during the coming trading sessions...

Disclosure: I am/we are short OSTK.

Additional disclosure: We intend to provide additional commentary in our ongoing coverage of OSTK.

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