Overstock Postpones Retail Business Exit, Holds Offer and Defers Cash for Blockchain Ventures

Overstock, a popular e-commerce platform, was supposed to go through a sale of its retail business, which would allow it to use the funds for its blockchain portfolio. The sale was supposed to take place at the end of this month. However, CEO Patrick Byrne, at a conference on fourth-quarter results, stated that the timeline has changed. He informed shareholders at the meeting that

“It’s like preparing a souffle, and a souffle is ready when it’s ready.”

He also discussed the company’s position that it is going to retain its original business and that he expects that it will have “a year of explosive growth” in its retail branch. Essentially, the branch will “spit out cash.” As for blockchain ventures, they might have to wait until the company has the influx of cash to invest.

The decision to hold off on blockchain investment may mean that the company is turning away from its previous vision of becoming a blockchain investment firm. Oddly enough, there seems to be a bit of conflict between the belief in growth in the retail division and the need to sell. The company’s annual report to the Securities and Exchange Commission, also released this week, indicated that the company needs to sell its retail business, otherwise its revenues may decline

“to an insignificant amount.”

The report also indicated that “Our retail business is a relatively mature and predictable business compared to our Medici initiatives, which have a short history, minimal revenues, significant expenses, significant losses, and significant uncertainties, and conduct business in a new and rapidly changing industry.” The sale would also cause the company to become much smaller.

Overstock is not completely shying away from crypto or blockchain though. The company has a security token trading platform, called tZero. According to a company executive, Overstock expects that the token will experience a “spike” in its volume over the summer, which will be the end of the regulatory lock-up period for TZEROP expiration and when investors will be allowed to use the platform. At this point though, the token has experienced low trading volume and the price has declined significantly in the first month of trading.

The token is also going through some changes, which may account for the stability. It has a new managing director, Elliot Grossman. And it launched an alternative trading system in January, but only for accredited investors who participated in tZERO Preferred security token offering.

There has also been some probing of tZERO by the SEC. In December 2018, the commission sent a follow-up request for information about the tZERO token sale. According to a statement by tZERO on the matter,

“We are cooperating fully with the SEC in connection with its investigation, which will require the time and attention of tZERO and our personnel and may have an adverse effect on our ability to focus attention on our businesses and our ability to raise capital.”

The platform seems to be trying to remedy the problems as well, as it is working to recruit an in-house retail broker-dealer and on a partnership with a brokerage company.

At the end of Byrne’s discussion this week, he concluded by stating that the company’s position is that it is going

“return retail to spitting out cash and we have a full position in the blockchain revolution.”


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