What happened

Shares of Overstock.com (BYON 2.70%) rose as much as 16.9% on Friday morning, following a mixed second-quarter earnings report.

So what

The e-commerce retailer and blockchain technology provider saw second-quarter revenue sliding 23% year over year, landing at $374 million. A 63% reduction in sales and marketing expenses helped Overstock reduce its adjusted bottom-line losses from $2.20 to $0.69 per share. Analysts, on average, had been expecting a net loss of $0.92 per share on revenue near $377 million.

Rendering of a steel chain zig-zagging across a white table. A single chain link is covered in black-and-green digital data.

Image source: Getty Images.

Now what

Both the retail and blockchain divisions of Overstock reported positive gross profits but negative operating income, though the retail segment came close to a breakeven operating result.

On the earnings call, CEO Patrick Byrne argued that Overstock's blockchain projects are evolving ahead of schedule to address several multibillion-dollar end markets.

"We have a multiyear head start in building the best training system for security tokens out there," Byrne said. "We have crossed some lines and put a lot of distance between us and competitors."

According to Byrne, investors have yet to appreciate the magnitude of Overstock's blockchain plans.

"This is an incredible set of achievements, that I actually don't think the market has recognized the significance of what these all stack up to," he said.

Share prices have indeed fallen 45% over the last year. If Byrne is right, we're looking at a massively undervalued innovator here. But he has been wrong before, and it could be hazardous to your financial health if you accept Byrne's projections without a healthy dose of salt. Overstock may be a promising stock today, but it's also a risky bet.