Overstock.com, the household goods retailer whose CEO Patrick Byrne is an ardent supporter of cryptocurrencies, announced Friday that the company would sell it retail business in 2019 and focus on blockchain enterprises as its main income source. Overstock shares surged as much as 26% on the news, showing an optimism among investors regarding a move to an asset class that has grabbed headlines this year for its rapidly declining value.
Overstock was founded in 1999 to sell goods like furniture and jewelry on the internet, but the retail side of the business has lagged behind competitors like Wayfair and Amazon. Byrne is now putting the future of the brand in the hands of the multiple blockchain startups, in which it has invested through its subsidiary Medici Ventures. Overstock itself is in debt, with $163 million lost in the first three quarters of this year, as some ventures are simply eating through money. One of the main culprits is tZero, a trading system that is yet to publicly launch, but is burning through $2 million per month. Medici is also working with Voatz, a blockchain-based smartphone voting app, while another project deals with digital property rights in Rwanda.
Overstock’s Bitcoin Bet
Overstock’s shares have matched the performance of Bitcoin in the last two years, rising through the back end of 2017 and rocketing 400% by January as Bitcoin raced to $20,000. Since January however the price has retraced in line with Bitcoin, crashing from $68 to $17 before Friday’s announcement. Analysts predict that the sale of Overstock won’t happen by February 2019 as Byrne predicts, but a purchase could prove a good investment for a number of potential buyers.
Byrne is not your traditional CEO (Overstock began accepting Bitcoin way back in 2013), and the move from established retail into the unknown world of blockchain and cryptocurrencies is another example of a man who is not afraid to take risks.