OSTK stock is one of the biggest losers on Monday after Overstock.com Inc (NASDAQ:OSTK) lowered its retail guidance for the full year.
Weak Outlook and New CEO
When companies make major announcements before the markets open, then the market almost always reacts one way or another. It goes without saying that the nature of the announcement is also important and that is what has happened with the Overstock this morning. In a new development, retail firm Overstock announced a new Chief Executive Officer and, in addition to that, cut down its guidance for retail sales for 2019. Former CEO Patrick Byrne stepped down from his position last month and long-time executive of the company, Jonathan Johnson, has been named as the new permanent CEO.
However, the market appears to be unimpressed with the announcements and OSTK stock slipped by as much as 15% at $12.73 on Monday morning.
Investors might not have been completely sold on Overstock due to the leadership vacuum over the past weeks, and it seems they are not happy with this morning’s developments either. In this regard, it is quite interesting to note that Byrne, who resigned last month, sold off the entire block of OSTK stock that he owned as the CEO.
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Johnson is a veteran of the company, joining Overstock.com 17 years ago as a general counsel, and has even served as the President of the company at one point.
Earlier on, Overstock had predicted highly positive EBIDTA from its retail business for the full year. However, now, the company has decided to cut its projections significantly. The company has pointed out the reasons behind the cut as well and cited five major factors. Among them, the most telling is the rising cost of goods imported from China and, in addition to that, Overstock also stated that its insurance premium has gone up.
Higher freight costs, the bankruptcy of Watkins, and plunging consumer confidence when it comes to big-ticket purchases have been cited as the other factors.
OSTK stock has slumped 48% over the past couple of weeks.
Featured image: DepositPhotos © Thomaspajot
