Overstock (NASDAQ:OSTK) is trending on social media, and OSTK stock is up about 10% after investors learned that the retailer has won the auction for some of the bankrupt Bed Bath & Beyond’s (OTCMKTS:BBBYQ) assets. This comes after Overstock entered a stalking horse bid earlier in June.
More About the Deal
Overstock will acquire Bed Bath & Beyond’s “intellectual property and digital assets… for $21.5 million.” OSTK also acquired the bankrupt retailer’s brand name with the transaction. The purchase price matches OSTK’s stalking horse offer.
In the wake of the deal, Bed Bath & Beyond’s remaining physical stores will be closed in the short term.
Bank of America’s Reaction
Bank of America analyst Curtis Nagle believes that, for Overstock, the transaction could be a cheap way to boost its top line. Specifically, he thinks that the e-commerce firm may get customer data in connection with the deal, enabling the firm to obtain new customers.
After OSTK submitted its bid but before it won the auction, Nagle “estimated that for every 1% of BB&B revenue, Overstock revenue would increase 3% and [its] adjusted EBITDA could go up by ~$10M.”
Bank of America had a $21.50 price target and a “neutral” rating on OSTK.
More About Overstock and OSTK Stock
In the first quarter, the company’s revenue tumbled 20% year-over-year, but it did manage to generate an adjusted EBITDA of $3 million.
Additionally, the company noted that its business had accelerated significantly towards the end of Q1.
In the last month before today, OSTK stock had climbed nearly 20%, and it has risen nearly 10% in 2023 but is still down 33% over the last 12 months.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
