Overstock's 2Q19 results beat on the bottom-line; tZERO hoping to hit its stride moving forward

Following Overstock’s ($OSTK) better than expected 2Q19 earnings results, the stock rose over 18% last Friday to $25.19 a share. Although the retail business continued to produce a quarterly net loss, the loss was not as significant as the Street had expected (-$0.69 a share vs. the estimate of -$0.79 a share) as a result of reduced marketing spend. The company continues its path towards the goal of achieving profitability, but cash on hand may be a headwind after the next 12 months if the business isn’t able to produce positive operating cash flows. In regards to the company's blockchain efforts, tZERO's trading volume on its security token ATS has been somewhat disappointing year to date but has the potential to scale within the next few quarters with new tokens in the pipeline and its own token, TZROP, now available to retail investors.

Since 1Q17, Overstock has produced negative earnings per share each quarter. After launching an aggressive marketing campaign to compete with its retail competitor, Wayfair, back in January 2018, the company later discontinued that strategy in August 2018 as losses escalated. Rather than focusing on competing with Wayfair’s sales growth, Overstock chose to instead try to bring its operating cash flows back in the green.