Overstock.com, a 19-year-old internet company, is selling its retail arm and focusing entirely on DLT. No potential buyers have yet been announced, and the retail arm is to be sold in February 2019. The company was the first major online store to accept BTC for goods in 2014.
Overstock.com share price surges 26%
The share price of Overstock.com rose 26% when the news reached the marketplace. This represents a common market phenomenon where prices rise when associated with the new industry. Companies that change their name to add “blockchain” or “DLT” will experience a share price increase, even without doing anything materially different.
However, Overstock is currently struggling, and the move likely comes as a form of refinancing. Despite reaching a high of USD 88 per share in January 2018, its price now sits at USD 20. Medici Ventures, a wholly owned subsidiary, is also reported to be losing significant amounts. Over USD 150 Million has been invested in the blockchain investment vehicle so far. An Overstock-owned trading system known as tZero is also in the red, though CEO Patrick Byrne does not seem worried –
“I don’t care whether tZero is losing $2 million a month. We think we’ve got cold fusion on the blockchain side.”
A market correlation?
Overstock market moves seem to be correlated with the price of BTC, despite reassurances from Byrne that the company does not hold significant amounts. Additionally, no mention was made of alternative cryptocurrencies. Overstock shares prices were at their highest in January 2018, while the price of BTC reached all-time highs in December 2017. Both BTC and Overstock declined by nearly 80% since. In September, Byrne sold over 10% of his shares with a value of over USD 20 Million. However, he indicated that he did this to make further investments in blockchain related ventures and to meet other obligations-
“Within a matter of days, I will reinvest most of this money into two co-investments with Overstock and Medici Ventures (thus I am eating a double dose of my own cooking, as months ago I promised you I would)…I needed to sell stock during this quarter to meet such other obligations…I sadly note that over the last 180 days the correlation between OSTK’s and Bitcoin’s daily movements has been 85.5%, and again warn people: we don’t have significant holdings of Bitcoin).”
Whatever his intentions, Overstock.com has been at the forefront of crypto adoption. For cryptocurrency to replace fiat, it is important for large retailers to accept the currency. Otherwise, people will be forced to trade crypto for fiat with the associated fees, simply to pay for basic goods and services. If more major retailers get on board (such as Amazon), it could facilitate a tipping point for mass adoption. Byrne himself has indicated that the imminent financial collapse will assist in the transition, stating that –
“the entire modern financial system is a big Keynesian, magic money tree Ponzi scheme. I do expect that the day will come when people turn to crypto.”
Digital Nomad with an interest in Zen and Blockchain technology.
Law graduate with 3 years experience as a consultant in the capital markets industry and 4 years experience freelancing on UpWork as a Creative Writer.