Overstock.com shares are sinking Tuesday after the company's third-quarter earnings report showed continued shriveling of its core e-commerce business. The company also announced plans to sell $150 million in new shares, and it disclosed that the Securities and Exchange Commission is investigating a number of issues related to its activities.
For the quarter, Overstock (ticker: OSTK) posted revenue of $347.1 million, down 21% year over year, as gross profit shrank 20% to $69.5 million. The company had an adjusted Ebitda (earnings before interest, taxes, depreciation, and amortization) loss of $18 million and a net loss of $30.9 million, or 89 cents a share. Gross margin inched up to 20%, from 19.7% a year ago.
Overstock CEO Jonathan Johnson said in a statement that the results were in line with guidance, and that the retail business "continues its path to sustained profitability, despite a few external headwinds." But the results were shy of Street estimates, which called for revenue of $376 million and a loss of 56 cents a share.
The company today also filed with the SEC to sell up to $150 million of new stock through a firm called JonesTrading. The stock would be sold periodically, over time, and not in a single offering.
In its 10-Q filing for the quarter, Overstock today also disclosed that on Oct. 7, it received a subpoena from the SEC requesting documents related to the company's proposed "digital dividend," a confusing security that the company has said would trade only on Overstock's own "Pro Securities" trading platform; under scrutiny, the distribution of that security previously has been delayed until early 2020.
The SEC is also seeking information on the company's communications with former CEO Patrick Byrne, who resigned in August amid strange claims about his role in investigations of Russian interference in U.S. elections.
Overstock shares are down 13.6%, at $8.14, in recent trading. The S&P 500 is up 0.45%.
Write to Eric J. Savitz at email@example.com