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This report was generated using published research from our Retail team led by Sector Head Brian McGough.
The company is an emerging powerhouse in the online home retail sector and stands on the cusp of a transformative period marked by innovative growth strategies, aggressive market positioning, and significant financial upside. This report delves into BYON’s strategic reinvention, including its omnichannel expansion, influencer marketing campaigns, and the strategic acquisition of Zulily. These initiatives are set against a backdrop of financial projections that suggest BYON is grossly undervalued by the market.
Company Background
Beyond, Inc., initially Overstock.com, Inc., founded in 1999, swiftly rose as an online retailer of discount home furniture. The company has navigated the competitive e-commerce landscape since the late 1990s despite stiff competition from giants like Amazon and Wayfair. In a notable strategic shift in 2023, it purchased the intellectual property and customer list assets of Bed Bath & Beyond, leading to rebranding the site to Bath & Beyond and the company to Beyond, Inc., alongside moving its stock listing from Nasdaq to NYSE under the new ticker BYON. This evolution underscores its aim to offer a broad range of home products through an asset-light e-commerce model, marking its commitment to innovation and customer connectivity in the digital retail space. Most recently, it has appointed Camping World (CWH) CEO Marcus Lemonis as executive chairman. McGough recently interviewed Lemonis on HedgeyeTV, which you can watch for free HERE.
Strategic Growth Initiatives
Overstock Banner Relaunch: The strategic relaunch of the Overstock banner and targeted growth plan is a direct offensive against competitors like Wayfair. This relaunch is part of a broader strategy to introduce new product categories and business initiatives throughout 2024, demonstrating BYON's agility and commitment to growth.
Influencer Marketing and Brand Segmentation Strategy: BYON's innovative planned use of influencer strategies aims to penetrate a wide consumer base, enhancing brand visibility and engagement. This non-traditional marketing approach (for the home segment), coupled with BYON’s product and brand segmentation across price points, positions the company to capture significant market share and drive revenue growth.
Acquisition of Zulily: The recent acquisition of Zulily provides BYON with strategic assets, including a vast customer database and a unique off-price outlet channel. This move not only diversifies BYON's product offerings but also significantly broadens its customer base, serving as a catalyst for future revenue growth.
Financial Analysis and Projections
Revenue and EBITDA Growth: BYON is poised for explosive growth, with revenue and EBITDA projections substantially outpacing consensus estimates. Our analysis indicates the potential for EPS to grow nearly 5x over Wall Street consensus, building to $6 per share in earnings over a TAIL (3-years or less) duration and achieving $400mm in EBITDA. This growth trajectory is anchored in BYON’s strategic initiatives and operational efficiencies.
Margin Expansion and Operational Efficiency: The anticipated margin expansion from -4% to over 12%+ signifies a dramatic operational turnaround. This expansion is supported by cost-cutting measures, SG&A optimization, and strategic investments in high-growth areas. The operational leverage inherent in BYON’s model suggests potential for robust cash flow generation and high returns on invested capital (ROIC).
Valuation Upside: Applying a 20x EBITDA multiple yields a $7 billion EV for BYON, translating to a stock price of $150-$160. This valuation reflects the significant undervaluation of BYON’s growth prospects and operational efficiencies. Given BYON's current price of $34 at the time of this report, this represents a substantial upside.
Risks and Mitigation Strategies
Execution Risks: The successful execution of the Overstock banner relaunch and the integration of Zulily into BYON’s operations are critical. Potential hiccups could affect growth projections. However, BYON’s experienced management and strategic focus on execution and scalability mitigate these risks.
Competitive Landscape: Increased competition from moves by competitors like Wayfair, particularly in pricing and market share battles, poses a risk. BYON's diversified strategy and stronger balance sheet, however, provide a buffer against these competitive pressures.
Conclusion
In conclusion, Beyond Inc. embodies a compelling investment proposition, underpinned by strategic innovation, operational excellence, and significant growth potential. The company's bold moves to redefine its business model and market positioning signal a new era of growth and profitability. Investors are advised to consider the long-term value creation potential of BYON, as it navigates through a transformative period with the promise of delivering substantial returns. As such, we maintain a bullish stance on BYON, as investors have a unique opportunity to consider BYON before the market fully recognizes its intrinsic value.