What happened

Shares of Overstock.com (NASDAQ:OSTK) jumped on Friday after the company reported its second-quarter results and announced an investment in its tZERO subsidiary. As of 12:25 p.m. EDT, the stock was up 18.1%.

So what

Overstock reported second-quarter revenue of $483.1 million, up 12% year over year. The company posted a net loss of $2.20 per share, driven by a more than doubling of sales and marketing expenses. Overstock is spending heavily on sponsored search, television, and display ads to increase its sales.

A rising stock chart.

Image source: Getty Images.

That massive increase in spending was entirely overshadowed by news regarding Ovestock's tZERO blockchain subsidiary. GSR Capital has agreed to invest up to $270 million in exchange for as much as 18% of tZERO's equity. That puts tZERO's post-money valuation at $1.5 billion. GSR also agreed to buy $30 million of tZERO security tokens and 3.1 million shares of Overstock. This deal replaces a previous agreement reached in June.

"The tokenization of securities has the potential to disrupt global capital markets responsible for moving hundreds of trillions of dollars. Together with our partners, we will globalize our blockchain-based platform, bringing more efficiency, liquidity, and trust to capital markets," said tZERO CEO Saum Noursalehi.

Now what

Overstock's core e-commerce business grew during the second quarter, but only because the company hurled cash into marketing. Overstock's GAAP operating loss through the first six months of the year totaled $120.9 million, about 13% of revenue.

Investors seemingly didn't care at all, instead pushing the stock up due to the tZERO news. Only time will tell whether Overstock's blockchain efforts ever produce real results.