Time limit for sale
According to a Wall Street Journal report, Overstock CEO Patrick Byrne has set February 2019 as the deadline to sell the company’s retail division. However, the report added that Byrne didn’t name a probable buyer. Overstock shot up 23.3% to $20.93 on Friday. On a year-to-date basis as of November 23, the stock is down 67.2%, as cryptocurrencies have been fading from the limelight.
For some time now, Overstock has been looking to sell the unit to fund its blockchain initiatives through tZERO and Medici Ventures. The company has been improving its retail operations to make it attractive to buyers.
Overstock has increased investments in marketing, which drove the revenue growth in the trailing two quarters. However, Overstock continues to face challenges due to changes made in search algorithms. Also, higher promotional activity has proved a drag on the top line. Plus, higher expenses are leading to subdued profitability and bottom-line numbers.
Blockchain ventures aren’t making money
The Wall Street Journal report further added that despite its three-year existence, tZERO is still losing millions of dollars a month. Overstock had invested $175 million in Medici Ventures, which is also not making any money. Medici Ventures lost $39 million in the first nine months of 2018. When asked about the loss-making tZero, Byrne said, “I don’t care whether tZero is losing $2 million a month. We think we’ve got cold fusion on the blockchain side.”
Blockchain is the technology that powers all cryptocurrencies including bitcoin. It is a distributed ledger system that keeps track of all transactions in one place. Since it is decentralized, and the data is visible to all, chances of fraudulent activity are significantly reduced.
Overstock is also upbeat about the investments it secured from GSR Capital earlier this year. GSR Capital had agreed to invest ~$375 million in Overstock and tZERO. Also, GSR Capital plans to buy tZERO security tokens worth $30 million.