BOSTON (CNN/Money) - When the CEO spells out his vision for a company, and the market buys into that strategy, pushing the company stock up from the teens to $77 in less than a year, what would you expect to happen when that vision actually starts materializing?

In most cases, you'd think the stock would continue its upward march. Not so with Overstock.com (Research), which saw its stock price plummet 27 percent in the days following an earnings call at the end of January in which CEO Patrick Byrne said the company was starting to perform as he had envisioned.

Overstock aims to offer "the lowest price on earth." Anyone who knows the basic laws of retail will recognize that means the company makes its money on high volume, not high margins.

If you buy into Byrne's plan for the company, Overstock is executing very well. Revenue in the last quarter was up 80 percent from a year ago, and the 2004 fiscal year saw revenue growth of 107 percent from 2003. Even the gross profits were up 158 percent from the previous year, and the company got $24.7 million in cash flow as it kept expenses in line with revenue growth.

But in his most recent quarterly note, Byrne also told investors that they wouldn't likely see gross margins north of 15 percent. He didn't say they were dropping. (In fact, they have risen.) Instead, the focus would be on attracting customers with lower prices.

Wall Street, obsessed with bottom-line growth, period, sold. I think the rush to the exits was shortsighted and ushers in a buying opportunity. Though Byrne's plan should grow the company's bottom line, analysts wanted margin growth too. They hyperventilated even though the company beat profit estimates by 50 percent, returning 12 cents a share instead of the predicted 8 cents.

Last week, I wrote about the problems facing Amazon and eBay, and how investors should play the companies' growth plans to escape the tightening online retail market.

Overstock has already shown its hand: it's growing through its low prices and gunning for volume. The company's last few filings show that it can grow quickly and that its strategy is resonating with consumers.

One final note on the company: On February 10, the FTC announced it was investigating Overstock, specifically concerns on shipping. The news led to a further five percent decline in the share price. The company blamed it on logistics.

"98 percent of our products ship within two business days. But as sales have grown, that two percent number must have hit a trip wire at the FTC. We do a great job of shipping, but we're taking [the FTC inquiry] seriously, and we're taking it as an opportunity to see if there are areas in our logistics we can improve. We don't think it is material," says Jonathan Johnson, Overstock's vice president for corporate affairs.

He added, "We were a little surprised by the hubbub it caused, and we feel we're being punished and not rewarded for our candor. But we'll continue doing the right thing. The good will catch up to us in the long run."

Lehman Bros. analyst Dan Muth issued a note on Friday that soothed most concerns, explaining that the FTC gets many such complaints on auction sites because sellers don't ship and buyers don't pay, but he advised investors, "From information we have gathered so far this looks to be a non-issue for OSTK and presents another buying opportunity."

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