Overstock shares grew over 21% right after the e-commerce retailer announced that the firm GSR Capital will invest over $270 million dollars into Overstock’s blockchain known as subsidiary tZero.
Overstock Shares Jump After GSR Capital Investment Plan is Unveiled
GSR Capital’s investment will be made at a valuation of $1.5 billion dollars due to the fact that the private equity firm has an 18% stake in tZero. Furthermore, the intention is to buy tZero security tokens from Overstock that are valued around $30 million dollars.
tZero is very excited about working with GSR Capital and having it as an investor, in the future, tokenized securities will be conforming a very important market of several trillions of dollars.
As tZero CEO Saum Noursalehi explained:
“We are honored to have GSR Capital as a strategic investor. The tokenization of securities has the potential to disrupt global capital markets responsible for moving hundreds of trillions of dollars. Together with out partners, we will globalize our blockchain-based platform, bringing more efficiency, liquidity, and trust to capital markets.”
At the end of the trading session the share closed at $38.6 dollars. It has since dropped, likely due to a market correction.
Bitcoin had an important price increase during 2017, because of this situation, Overstock is creating new blockchain deals and moving from its retail business. About tZERO, the company informed that the U.S. Securities and Exchange Commission (SEC) is working side by side with Overstock and cooperating.
Patrick Byrne, Overstock CEO, explained that the company is one of the most difficult-to-value stocks in the market because it is related to the virtual currency world. He mentioned that it is important to elucidate the different parts of the business and understand their real potential value for the future.
Additionally, Byrne hinted that the company will be investing less on the retail unit and stem the company’s losses.
“Given the rapidly growing value of our non retail assets, we think shareholders are better served now by a cash-conservative strategy,” he mentioned. “I believe Overstock can focus on developing more non traditional means of growth and profitability.”
The decision taken by Overstock to move into cryptocurrencies has been a very positive for the enterprise and has a strategic sense for the company.