Following news that Overstock founder Patrick Byrne is selling the company’s retail business to focus on its blockchain offering, shares of Overstock have surged a massive 23.26 percent to end the day at $ 20.93.
CCN earlier reported that Byrne decided to sell the retail business based on a conviction that tZero, the ICO backed by Overstock’s blockchain investment arm Medici Ventures has “multi billion dollar” potential.
Byrne’s Audacious Gamble
The company, which rode the initial internet business wave to become one of the world’s most recognised names for selling furniture and jewelry online is now in the process of reinventing itself as a blockchain startup accelerator through Medici. This, however, has come at a significant financial cost.
Over three years after backing tZero, the startup is yet to launch commercially, while costing Overstock millions of dollars every month alongside several other blockchain-based startups supported by Medici. Byrne has consistently remained steadfast in his belief that the startups will not only become successful but will form the core of Overstock’s future. This is also helped by the fact that Overstock is sitting on a substantial pile of cash in cluding more than $ 130 million raised in the tZero token sale.
In a year that has seen Overstock’s share price fall 66 percent to date in line with the bearish performance of the crypto market, Friday’s announcement saw a 23 percent spike from just about $ 18 to more than $ 20.
Overstock’s Blockchain Gamble
Based in Salt Lake City, Medici has taken in more than $ 175 in investment from Overstock since its launch in 2014, but it is yet to break even. According to records, the company lost about $ 39 million between Q1 and Q3 2018 in addition to a net loss of $ 22 million in 2017. Its parent company is also losing money, having recorded a net loss of $ 163 million between Q1 and Q3 2018, but driven by its founder’s passion for blockchain, it continues to invest huge amounts in the blockchain space based on a belief that blockchain technology is set to become a global standard.
One of Medici’s most notable investments is in Voatz, a blockchain-based smartphone app for voting. The company also has investment positions in a variety of blockchain projects around the world including a digital property rights startup in Rwanda.
Publicly, the company disavows bitcoin and cryptocurrencies as the main driver of its business, with Byrne telling investors in September that it does not hold “significant. bitcoin holdings. Despite this, Overstock’s share price has sharply correlated to the market performance of bitcoin, surging more than 400 percent from bitcoin’s 2017 bull run to date.
Featured image from Shutterstock.
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