Overstock's Stock Prices Crash, Recent Gains From Its Blockchain Plans Now All Gone

Omar Faridi
  • Overstock.com Inc's market value recently dropped by 21%, and is now down nearly 50% this year.
  • The internet retailer's stock prices surged over 20% after its announcement of a $270 blockchain-related investment from GSR Capital on Aug 9th.
  • The gains are now all gone, while Overstock's operating income is -46.63 million.

Overstock (NASDAQ:OSTK), an American online retail company, has lost 21 percent of its market value this week. Since January, the struggling internet retailer’s market capitalization has dropped by nearly 50 percent to less than $1 billion. This, despite Overstock’s aggressive efforts to remain competitive by recently securing a $270 million investment for its tZero subsidiary.

Saum Noursalehi, tZero’s CEO, had expressed confidence in the company’s new business strategy, after receiving the $270 million investment from Hong Kong-based GSR Capital. Both parties reportedly also agreed to use the funds to enhance capital markets’ efficiency and increase liquidity by leveraging blockchain technology.

Overstock Shares Surge, Then Plummet

Following the new partnership announcement on August 9th, Overstock’s stock price increased by over 20%. Now though, the e-commerce firm has lost all its temporary gains, presumably due to investors realizing that it had recorded a $64,9 million net loss for Q2 2018.

Moreover, Overstock’s business appears to suffering greatly, considering it also reported a $7.5 million net loss during the same time period in 2017. Despite not earning any profits, the online retailer still has 1800 employees on its payroll.

Overstock has also experimented with various business ideas in order to remain afloat. In 2014, it became one of the first online retailers to start accepting cryptocurrency payments for items sold on its website. Also, after crypto prices surged in 2017, Overstock announced that it would start investing heavily in cryptocurrencies by holding 50% of the crypto payments it received.

Blockchain-based Digital Guilder

On August 14th, Medici Ventures, Overstock’s blockchain-focused division, announced that it had signed a Memorandum of Understanding (MoU) with the central bank of Curaçao, a Caribbean island constituent country of the Kingdom of the Netherlands.

Per the MoU, Medici Venture’s financial technology firm Bitt will help Curaçao’s reserve bank and Caribbean island country Sint Maarten (also a part of the Kingdom of the Netherlands), launch a blockchain-based digital guilder.

Bitt Inc. CEO Rawdan Adams explained:

"The MOU clears the way for collaboration and information sharing regarding a feasibility study, designed to determine the viability and functionality of using a central bank-issued digital guilder within the financial ecosystems of each member, and across both members of the monetary union."

Rawdan Adams

Much More Needed To Stay Afloat

Notably, the announcement of Overstock’s blockchain-related plans in the Caribbean temporarily stopped the sharp decline in its stock price. However, it will likely take a lot more than just a small digital currency project to help the company recover, as its last reported operating income was -$46.63 million.