Overstock (OSTK) Surges 26% After CEO Reveals Company’s Plan Of Selling Retail Business By February To Focus On Crypto

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Overstock Surges 26% After CEO Reveals Company’s Plan Of Selling Retail Business By February To Focus On Crypto

Overstock (OSTK) is reportedly planning to sell its retail business. The transaction of the 2-decade-old e-commerce business is likely to close in the next few months as the company prepares for a full-blown bet on the digital ledger technology i.e. blockchain.

The sale plans were revealed some time back and details are now out. There are speculations of the transaction to take place somewhere in February 2019, reported The Wall Street Journal citing the company’s CEO. The founder and CEO of Overstock, Patrick Byrne carries blind faith in the blockchain technology that underpins various cryptocurrencies including Bitcoin. However, Byrne refrained to name any potential buyer.

Following the news, shares of Overstock rose by 26%; however, its stock plunged by 66% in 2018. Overstock is a result of Byrne’s sheer hard work. The company was incepted in 1999 with the focus to trade furniture and jewelry online. Byrne is now eyeing the blockchain technology for the new subsidy that will be opened upon the closure of the retail unit. The new subsidiary named Medici Ventures will be based on the foundation of multiple blockchain start-ups.

The company has invested $175 million since 2015 in the launch of Medici. In the first three quarters of 2018, the unit lost as much as $39 million. In 2017, the unit reported a loss of $22 million, as the public filings of the company. Overstock reported a loss of $163 million in the first three quarters of 2018.

tZero is one of the start-ups investing in the launch of the subsidiary. The start-up reported a loss of $2 million per month. Byrne in an interview to the Journal said that he is least bothered by the financial condition of tZero. The two companies are joining hands in favor of the blockchain technology.

There are a number of start-ups under Medici. These startups have their scopes beyond simply cryptocurrencies. One of the startups, Voatz, supports blockchain-based voting via a smartphone app while another start-up focuses on providing digital property rights in Rwanda.

Overstock, according to a statement by Byrne, doesn’t have any holdings in Bitcoin (BTC). Still, the price of a share has been closely correlated. In 2017, the cryptocurrency rose to about $20,000 after which the shares of Overstock rose 400% plus from July through the end of 2018. In January shares of Overstock traded above $80; since then, the stock was reported to be declining downwards and achieved a price of just above $21. On the same day, Bitcoin was reported to be trading above $4,200, which down 78% from high achieved last December.

Multiple Wall Street CEOs shrugged off Bitcoin by calling them a bubble or scam, while Berkshire Hathaway’s CEO Warren Buffett compared it to rat poison. Nevertheless, the underlying technology behind the Bitcoin is largely accepted by public companies. Blockchain technology, in fact, is being currently implemented by IBM, J.P. Morgan, Deloitte, Amazon, and Facebook due to highly-secured features which the technology offers.

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