18 Dec

Why Overstock Fell 21.5% Yesterday

WRITTEN BY Victoria Dean

Dismal stock price movement

Overstock’s (OSTK) nightmarish run on the trading front continues. The stock tanked 21.5% to $13.51 on December 17. On a year-to-date basis, Overstock is down about 78.9%. The stock had gained an impressive 265.1% in 2017 and closed at a high of $63.90 on December 29, 2017.

So, what is causing the dismal run? Last year, the stock was propelled to record highs due to the craze surrounding bitcoin and other cryptocurrencies. However, 2018 wasn’t a good year for cryptocurrencies. Regulatory crackdowns and increasing skepticism regarding bitcoin trade contributed to the cryptocurrency fall, which has also contributed to Overstock’s dismal stock price trajectory.

Why Overstock Fell 21.5% Yesterday

Overstock was one of the first few retailers to accept bitcoin as payment. Also, the company is moving toward becoming a blockchain-focused company. CEO Patrick Byrne set February as the deadline to offload retail operations to fund its tZERO and Medici Ventures.

Yesterday’s sell-off was likely sparked by broader market declines. On December 17, both the S&P 500 Index and Dow Jones were down 2.1%. The NASDAQ Composite Index declined 2.3%, while the NYSE composite was down 1.9%. According to a CNBC report, markets took a hit as the Federal Reserve is again planning to increase the interest rates.

Also, news that bitcoin could fall to zero may have contributed to the stock price decline yesterday. In December 2017, bitcoin hit a high of $20,000.

What lies ahead for Overstock?

Overstock’s blockchain initiatives look dicey given that they are still not making any money for the company. In a report on November 23, the Wall Street Journal explained that tZERO and Medici Ventures are still losing millions of dollars a month even after being in existence for three years.

However, Byrne sounds unfazed. He said, “I don’t care whether tZero is losing $2 million a month. We think we’ve got cold fusion on the blockchain side.”

Bitcoin may or may not survive, but the underlying technology, the blockchain, is expected to survive. In addition to Overstock, several big names like Oracle, IBM, and Alphabet are also exploring blockchain technology and its uses.

 

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