Please ensure Javascript is enabled for purposes of website accessibility

Why Is Soaring 13% Today

By Rich Duprey - Updated Apr 21, 2020 at 8:53AM

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

Its new digital dividend will be distributed next week.

What happened

Shares of (OSTK -5.36%) were soaring 13% higher in midday trading as the company announced it was a week away from issuing shareholders their digital dividend.

On April 27, the online marketplace will issue to shareholders one "digitally enhanced security" for each share of Overstock they own. The dividend is held in an investor’s brokerage or custodial account and trades on Overstock’s affiliated tZero blockchain platform.

Chain with digits printed on it.

Image source: Getty Images.

So what

Championed by former CEO Patrick Byrne, the Series A-1 preferred stock (OSTKO) helps validate his push for blockchain technology to benefit investors. Byrne has said the digital dividend could end up being more valuable than Overstock's Nasdaq-traded stock, which has often been the target of short-sellers.

Some 5.8 million shares of the online marketplace are currently sold short, which is less than half the amount from last August, when he first proposed the plan.

Now what

Current CEO Jonathan Johnson said in a statement, "Overstock has long championed a new capital markets system built on trust through technology. This innovative dividend issuance is another step in that direction. I'm pleased that the dividend will trade on the tZERO platform."

Although the digital dividend can be deposited through DTC, the largest securities depository in the world, investors should probably not buy stock just to acquire it. The marketplace's business has suffered from falling sales and continued losses, and a replacement for its CFO, who resigned in September, was named just last month.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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, Inc. Stock Quote, Inc.
$32.30 (-5.36%) $-1.83

*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 analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/17/2022.

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

Premium Investing Services

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