Why $OSTK is undervalued and Iโ€™m tempted to go all in๐Ÿš€

Company background: Overstock.com was founded in 1997 and is primarily an online retailer for home goods, but they also own a subsidiary called Medici Ventures, a venture capital fund that manages and oversees 19 block โ›“ technology companies. Current Stock Price and Market Cap: $58 and $2.5 Billion Bull Cases: Trading at less than 0.9x price to sales compared to the industry average of 4.5x $512 million in cash (20% of market cap) Announced $100 million stock repurchase program Positive free cash flow 6 straight profitable quarters 23% gross margins Ranked 4th in online revenue out of online home furnishing brands, (a $325 billion market.) Only behind Amazon, Wayfair, and Walmart Have been able to avoid supply chain issues while also increasing their margins with their distributed supply chain network and drop shipping business model. Taking market share from Wayfair despite Wayfair trading at a 40% P/S premium over OSTK. Not to mention Wayfair isnโ€™t even profitable Projected 12% growth in 2022 despite the pandemic fueled hyper growth they experienced throughout 2020-2021. The value of their ownership of Medici Ventures is not baked it to the stock price. tZero and Bitt (the two largest holdings) are worth at least $1 billion by themselves, not to mention the other 17 companies they hold. tZero is reportedly looking to get bought out or could possibly go public via SPAC. Either of these would send Overstock to the ๐ŸŒ• Average analyst price target is $120 with a street high of $157 and low of $90. (Current price is $59) Bear Cases: Q3 revenue growth slightly decelerated by -4% since Q3 of 2020 Competitors with behemoths such as Amazon and Walmart Stock has been getting crushed recently for no fundamental reason, going from $108 on 11/19 to $59 on 12/31. Though I believe this is likely the bottom as the stock has gone from $60 to $100+ 3 times in the last year Shorts love this stock. 12% of free float sold short Summary: I know Overstock isnโ€™t the most exciting company out there but the the value and risk/reward here is undeniable. Their online retail business alone is definitely undervalued and their ownership of Medici Ventures basically serves as a free call option within the stock. They also have juicy premiums which is nice for hodlers who like to sell covered calls

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Why $OSTK is undervalued and Iโ€™m tempted to go all in๐Ÿš€

bullish

Company background:

Overstock.com was founded in 1997 and is primarily an online retailer for home goods, but they also own a subsidiary called Medici Ventures, a venture capital fund that manages and oversees 19 block โ›“ technology companies.

Current Stock Price and Market Cap:

$58 and $2.5 Billion

Bull Cases:

  • Trading at less than 0.9x price to sales compared to the industry average of 4.5x

  • $512 million in cash (20% of market cap)

  • Announced $100 million stock repurchase program

  • Positive free cash flow

  • 6 straight profitable quarters

  • 23% gross margins

  • Ranked 4th in online revenue out of online home furnishing brands, (a $325 billion market.) Only behind Amazon, Wayfair, and Walmart

  • Have been able to avoid supply chain issues while also increasing their margins with their distributed supply chain network and drop shipping business model.

  • Taking market share from Wayfair despite Wayfair trading at a 40% P/S premium over OSTK. Not to mention Wayfair isn't even profitable

  • Projected 12% growth in 2022 despite the pandemic fueled hyper growth they experienced throughout 2020-2021.

  • The value of their ownership of Medici Ventures is not baked it to the stock price. tZero and Bitt (the two largest holdings) are worth at least $1 billion by themselves, not to mention the other 17 companies they hold.

  • tZero is reportedly looking to get bought out or could possibly go public via SPAC. Either of these would send Overstock to the ๐ŸŒ•

  • Average analyst price target is $120 with a street high of $157 and low of $90. (Current price is $59)

Bear Cases:

  • Q3 revenue growth slightly decelerated by -4% since Q3 of 2020

  • Competitors with behemoths such as Amazon and Walmart

  • Stock has been getting crushed recently for no fundamental reason, going from $108 on 11/19 to $59 on 12/31. Though I believe this is likely the bottom as the stock has gone from $60 to $100+ 3 times in the last year

  • Shorts love this stock. 12% of free float sold short

Summary:

I know Overstock isn't the most exciting company out there but the the value and risk/reward here is undeniable. Their online retail business alone is definitely undervalued and their ownership of Medici Ventures basically serves as a free call option within the stock. They also have juicy premiums which is nice for hodlers who like to sell covered calls

read-time
1 min
115.00
Target Price
7/ 10
Confidence
1-3 Years
Timeframe
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Earnings Release
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News
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SEC
Filing
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