What happened

Shares of Overstock (BYON -4.19%) outpaced the market by a wide margin last month, gaining 28% compared to an 8% spike in the S&P 500, according to data provided by S&P Global Market Intelligence.

The rally did little to chip away at the losses that long-term shareholders have suffered, though, as the e-commerce retailing company's stock is still down by over 60% in the past year.

A man interacts with a security platform.

Image source: Getty Images.

So what

Part of January's spike can be tied to those prior head-turning losses. Given the dramatic updraft in the broader market last month, many hard-hit stocks, including Overstock, were among the biggest short-term gainers when investor sentiment turned positive.

The company added fuel to that fire with news that its blockchain initiatives are finding traction. Specifically, Overstock said on Jan. 22 that tZERO, its cryptocurrency subsidiary, had launched public trading of its proprietary currency tokens. Management has bet much of the company's future on that technology, and so this progress marked an important step in its plans to boost long-term shareholder value.

Check out the latest Overstock earnings call transcript.

Now what

Many fundamental questions remain about this stock, including the long-term earnings potential of its shift into cryptocurrencies. It's also unclear how much money Overstock will receive if it succeeds in finding a buyer for its struggling e-commerce business. As a result, the stock won't be attractive to investors unless they have a large appetite for risk and an optimistic assessment of the cryptocurrency technology platform. Even then, potential buyers might want to wait for more clarity to develop around this business before jumping into shares today.