How Long Can OSTK Last?
Going strictly on OSTK’s recent quarterly figures, the company’s burn rate (excluding capex) is approximately $3.4 mil. At this rate, its cash reserves and recent quarterly numbers imply that OSTK will run out of cash in about 9 months. Working cap burn rate gives a slight glimmer of hope for OSTK, suggesting that it has almost 15 months.
What are they going to do about cash if they don’t drastically improve operating and net margins? I can understand that Pat Byrne uses his company to favor consumers, but this comes at the cost to its bottom line figures. He doesn’t want to “play the Wall St. game” and gives little importance to EBITDA. Growing top line is easy when you’re practically giving things away, but what does that mean for its shareholders?
Pat Byrne seems like he’s reluctant to issue more shares to float. Its cost of cap is most likely to go up as banks would most likely second guess before lending to OSTK (who knows how it would be spent). I’m not sure funding his crusade would reflect a wise investment.
Was all of this commotion a bad and costly publicity stunt to get people to visit overstock.com? Pat Byrne takes the insults and then passes the company off to his father, as he stated this plan in the recent Q&A with Motley Fool. Whatever the case, its business model makes little investment sense. They need to seriously improve operations. Its future simply remains too uncertain, especially with all of its hoopla going on now.