Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Overstock.com Inc. Plunged More Than 10% on Wednesday

By Steve Symington - Sep 6, 2018 at 9:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Goldman just shelved plans for a bitcoin trading desk, hurting cryptocurrency stocks in the process.

What happened

Shares of e-commerce and blockchain specialist Overstock.com Inc. ( OSTK -4.63% ) declined 10.3% on Wednesday amid a broader pullback in cryptocurrency stocks after a report that Goldman Sachs (NYSE: GS) is no longer planning to launch a cryptocurrency trading desk.

For many, the desk would have signaled a notable vote of confidence while lending a tone of legitimacy to the future of cryptocurrencies and cryptocurrency trading. Alas, the price of bitcoin plunged more than 12% on Wednesday in response to Goldman's move, dragging down a handful of related crypto and blockchain technology names.

Blue-and-green stock market charts indicating gains

IMAGE SOURCE: GETTY IMAGES.

So what

According to a report from Business Insider, Goldman Sachs is concerned with the "uncertain regulatory landscape" for cryptocurrencies. Instead -- and with the caveat that it may open such a trading desk in the future if the situation changes -- Goldman is shifting its efforts on other ways to participate in the cryptocurrency markets, potentially including a custody product that would allow them to better cater to large institutional clients interested in the space.

Of course, this news doesn't directly affect Overstock as it pertains to advancing its own blockchain enterprises segment. It's worth noting, though, that the company is currently exploring strategic alternatives for its e-commerce operations, including a potential sale of the segment to allow Overstock to hone its focus on its blockchain and cryptocentric technologies.

Now what

Assuming Overstock is successful in divesting its e-commerce business, however, that also means it will have effectively narrowed its scope to become wholly dependent on the industry that Goldman Sachs seemingly snubbed yesterday. Consequently, with no shortage of crypto developments filling the news feeds these days, Overstock investors would do well to grow more accustomed to this kind of volatility going forward.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Overstock.com, Inc. Stock Quote
Overstock.com, Inc.
OSTK
$80.70 (-4.63%) $-3.92

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
640%
 
S&P 500 Returns
139%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/04/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.