Shares of Overstock.com (NASDAQ:OSTK) gained 265.1% in 2017, according to data from S&P Global Market Intelligence. The company's online retail operations had little to do with this soaring surge. Instead, most of these gains were tied to skyrocketing prices and rising interest in bitcoin and other cryptocurrencies.
Overstock was an early bitcoin adopter, having accepted payment in that form since 2014. Over the years, the company only grew more and more interested in cryptocurrencies and blockchain technologies. These days, Overstock investors need to know about its subsidiary Medici Ventures, which invests in some third-party blockchain businesses and does a fair bit of its own research in that field.
Medici Ventures has been a money-losing business so far, but it could raise as much as $500 million in the upcoming launch of a blockchain-based trading platform for stocks and other financial assets.
In December, Overstock CEO Patrick Byrne stoked the cryptocurrency fires when he said that he might want to sell Overstock's e-tailing operations and pour the extra cash into accelerating his blockchain-based business ideas instead. That tidbit was a major driver behind the stock's 36% surge in December alone.
So it's pretty obvious that Overstock's future will be tightly correlated with the rise of cryptocurrencies and blockchain solutions. It's hard not to get excited about it, given that bitcoin prices rose from $1,000 to $20,000 last year. But it's also a good idea to take the gains with a pinch of salt, because cryptocurrencies are incredibly volatile in both directions -- bitcoin prices are back down to $15,000 per coin, for example, and that's less than a month after hitting that sweet $20,000 peak.
Byrne could certainly back down from his crypto-focused plans, and it might be difficult to find a buyer of Overstock's low-margin retail business anyhow. But I wouldn't be surprised to see the company transform into a pure blockchain bet by the end of 2018, built around the Medici Ventures subsidiary.