# retained earnings question - OSTK



## Steve64 (Jun 28, 2016)

Hi Everyone... i'm looking into some #'s for OSTK and notice they have retained earnings of -71mil. There was also a spike in the share price a few months after covid hit. This company buys up other company's inventories at a discount and sells back to the market at a profit. It stands to reason there would have been some great deals for it after covid did it's damage to companies carrying huge inventories. This also might be the reason why their receivables are $30mil while their payables are $245mil (they are holding the inventories until they can find the best buyers. They have plenty of cash so i don't see this as a problem but more of an indication they bought a lot of great deals that were avail. So if the retained earnings are -71 mil would this be logical if they bought up a lot of inventories (basically spent all avail resources on buying up the great deals available) or would this indicate something else is going on?

thanks in advance.


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## RussT (Jul 11, 2016)

Retained Earnings is the accumulated profits of all years the company has been in operation less any dividends that have been paid to shareholders during that period. (Or simply earnings that have been retained for use in the company.) Overstock has been around for 20 years and over that time the annual losses have exceeded the annual profits by $71 million. I didn't check this number and I didn't check to see if some of this negative amount was caused by dividend payments during periods when RE may have been a positive number. With very few exceptions, dividends can't be paid when RE is negative.

If there has been a share price spike (questionable in the case of Overstock) it is because investors see potential for improved share prices in the future either due to potential profit improvements, a buyout or some other future event. The company did turn a small profit in 2020 after sizable losses in 2017 - 2019.


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## Steve64 (Jun 28, 2016)

RussT said:


> Retained Earnings is the accumulated profits of all years the company has been in operation less any dividends that have been paid to shareholders during that period. (Or simply earnings that have been retained for use in the company.) Overstock has been around for 20 years and over that time the annual losses have exceeded the annual profits by $71 million. I didn't check this number and I didn't check to see if some of this negative amount was caused by dividend payments during periods when RE may have been a positive number. With very few exceptions, dividends can't be paid when RE is negative.
> 
> If there has been a share price spike (questionable in the case of Overstock) it is because investors see potential for improved share prices in the future either due to potential profit improvements, a buyout or some other future event. The company did turn a small profit in 2020 after sizable losses in 2017 - 2019.


Thanks for the insight RussT


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