Overstock.com Inc (NASDAQ: OSTK) has been around a long time, at least relative to many large, discount online retailers. And its CEO, Patrick Byrne, always has been an out-of-the-box thinker. Overstock was one of the first companies to accept the then nearly unheard-of bitcoin as payment.
Since it went public in 2002 — after the dotcom bubble burst — OSTK stock has seen its ups and downs. And a very long period of neither. But it has endured.
In the past 6 months, the stock has shot up more than 300%. That isn’t a typo.
Well, it has nothing to do with a better way to sell overstocked items at better margins.
It has to do with — what else? — cryptocurrencies.
Yes, 2017 was a breakout year for bitcoin and all the other cryptocurrencies currently crawling out of the wood work. Woebegone companies have launched ‘coins’. Countries have launched them. Its seems everyone is launching a cryptocurrency at this point.
And so is Overstock.
tZero: A Cryptocurrency And The First SEC-Regulated ATS
With tZero, Byrne is –as usual– thinking outside the box. He isn’t simply talking about launching a cryptocurrency and spinning off the online retailing business. He’s talking about building a new trading platform using blockchain technology that would revolutionize how markets are traded in the future.
And yes, launching a cryptocurrency, while he’s at it.
Both efforts are going under the name tZERO. The exchange has been set up and approved by the Securities and Exchange Commission (SEC) as an alternative trading system (ATS).
Dark pool investing came into vogue as technology advanced and transactions got faster and faster, allowing data to be analyzed in ways never before imagined. Big trading houses could use dark pools to buy and sell large amounts of securities without the buyer know who the seller was, since these pools were outside the open market.
tZERO sees the opportunity to use that concept but open it up to everyone using the decentralized nature of blockchain.
This is what has driven OSTK’s stock price through the roof.
And the thing is, people have run numbers on what it might take for this crazy idea to work — and it is very possible. OSTK may very well ditch its retail shop for a blockchain exchange.
The Bottom Line On OSTK
Of course, this all means that there are no real numbers that you can use to analyze the value in this proposition. Splitting the exchange potential, from the coin potential, from the retail numbers, is nearly impossible.
And yet, to value the company only as an online retailer seems a bit silly as well.
The facts are, Byrne has a deep knowledge of this space and has built a solid team and advisory board.
What’s more, it is emerging as one of the best pure plays on the blockchain without having to buy a cryptocurrency.
It may be a gamble, but if you’re bullish on bitcoin, you may want to consider OSTK instead.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.