Analyst Says Overstock Should Ditch Retail To Focus On Blockchain

Overstock got its price target lifted last week after the company indicated that it could sell the home eCommerce unit to focus more on its blockchain aspirations, reported CNBC.

According to the news report, D.A. Davidson analyst Tom Forte upped his price target on Overstock to $85 from $75, implying the stock could surge 60 percent after the company indicated on last week’s earnings call that it would be open to selling its home eCommerce business. Forte is the only Wall Street analyst covering Overstock.

“We now see the possibility of unlocking value in its two most significant assets – its home eCommerce effort and Medici Ventures (portfolio of nine companies that, to varying degrees, leverage the blockchain),” Forte said. The analyst currently rates Overstock at a buy, arguing Wall Street doesn’t get the value behind its cryptocurrency-focused unit Medici Ventures, which the company launched in 2014.

Last month, Overstock rose 11.6 percent as a result of the company’s investment in blockchain. The stock has reached four-year highs due to investor interest in the technology.

CEO Patrick Byrne has spent three years developing Medici Ventures. Much of the investor excitement surrounds Medici’s subsidiary, tZERO, a solution that applies blockchain to stock trading and the exchange of digital coins.

“I think the new story for Overstock is that we should anticipate this kind of volatility that historically was limited to when the company reported earnings,” said Forte at the time. “It is encouraging to see legacy financial services acknowledging the potential of the blockchain to disrupt and transform the financial services industry.”

Despite investor buzz, Medici Ventures is still generating losses for the company. Pre-tax, Overstock disclosed the subsidiary posted losses of $3.3 million during the second quarter, up $400,000 from the same period of last year.


Latest Insights:

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. In the December 2019 Mobile Card App Adoption Study, PYMNTS surveyed 2,000 U.S. consumers for a reveal of the four most compelling features apps must have to engage users and drive greater adoption.