Why Overstock.com Stock Spiked Today?
Jan 26, 2020 by InvestorDestination Team
Shares of online furniture retailer Overstock.com (NASDAQ: OSTK) gained 28% today. Nowadays, volatility is causing shares of many companies to gain double-digits without any news from companies. But in this case, the stock gain is triggered by Overstock.com's announcement.
The company's core business is selling furniture online. In 2014 it launched a wholly-owned subsidiary called Medici Partners to focus on the growth and promotion of blockchain technology. Yesterday it announced that it is converting that wholly-owned subsidiary to a limited partnership (the Fund) and partnering with Pelion Venture Partners. Pelion Venture Partners will act as the general partners of the Fund. Overstock will be a limited partner in the Fund, and the Fund will have an eight-year life.
During this pandemic, as people spend more time indoors, they have opened their wallets to decorate their homes. Nowadays, investors are overly enthusiastic about blockchain-based investments. Overstock.com's exposure to blockchain, market volatility, and consumer spending habits helped its stock gain 900% in the past year. Investors believe that this partnership will help the company focus on its core business, and Pelion Venture Partners' expertise will help grow Overstock.com's blockchain business. So, investors are cheering on this partnership.
We believe blockchain technology is here to stay. The partnership might help the company unlock its blockchain asset value. However, considering investors' overenthusiasm towards blockchain as well general stock market, long-term investors should use caution.
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