Summary: OVERPRICED
Score: 4/20
MOS: 0%
Share Price: $106
Sticker Price: $0
Is Overstock.com a good buy?
Overstock.com is an internet retailer headquartered in Midvale, UT. Overstock.com was originally founded in 1997 as Discounts Direct. Two years later, it was sold and renamed Overstock.com. The company initially sold exclusively surplus and returned merchandise on an online e-commerce marketplace, liquidating the inventories of at least 18 failed dot-com companies at below-wholesale prices. The company continues to sell home decor, furniture, bedding, and many other goods that are closeout merchandise. Now today, it also sells new merchandise.
Overstock’s share price was $3.76 in March of this year and now it hit an all time high of $103 about two weeks ago. That’s over a 2,000% return in just a few months.
What caused this?
A recent article written by Forbes states that ecommerce has increased by 129% this year. COVID-19 has caused more people to shop online than ever before and Overstock is capitalizing on it. In fact, Overstock’s revenues doubled this year due to the increased shopping behavior which caused the stock price to surge. In other words, emotions have caused people to keep buying the stock even though it’s well OVERPRICED.
Can we count on Overstock to keep climbing higher?
No.
As of today that stock is already down to $88. That’s a decline of 14% in less than a month.
Will the stock go back to $3?
Probably not but based on the sticker price, the share price could fall significantly more.
The lesson to be learned here is to trust the data in Tykr. Some stocks will break out and climb high even though they are OVERPRICED but keep in mind if they are OVERPRICED, the stock is highly likely to fall back down. If you take the risk and buy OVERPRICED stocks that keep climbing, the trick is to sell when the stock falls back down. If you don’t, you could watch it go back to the original price and you’ll be telling yourself you should have sold earlier. Don’t let that happen.
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