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Why Overstock Shares Jumped Today

By Evan Niu, CFA – Updated Jun 11, 2020 at 10:36AM

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The company's tZERO trading platform saw strong growth in May.

What happened

Shares of Overstock (OSTK -0.69%) have jumped today, up by 8% as of 1:45 p.m. EDT, after the company said that its tZERO ATS trading platform saw record engagement last month. The e-commerce company is betting big on its expansion into blockchain-based digital securities.

So what

Following the distribution of a digital dividend to Overstock shareholders last month, tZERO saw transactions in May jump by fourfold to 423,000. Transaction volumes have increased by almost 50% year to date through May, according to Overstock. tZERO ATS represented over 95% of all security-token volume transactions in May.

Illustration of blockchain

Image source: Getty Images.

The company also said it enjoyed "record growth in investors" on the platform after expanding relationships with broker-dealers. tZERO ATS, a platform for trading digital securities and security tokens, currently has three active broker-dealer subscribers and is in the process of getting more on board.

Now what

"We had four times the trading volume last month, compared to May 2019," tZERO CEO Saum Noursalehi said in a statement. "Having significantly enhanced the liquidity on our platform, we are positioned to offer issuers and investors the best trading experience for tokenized securities."

Separately, the tZERO Crypto app saw its user base grow by 15% last month, a record monthly gain. On the earnings call last month, CEO Jonathan Johnson had said that the distribution of the digital dividend "should increase participation on the tZERO platform, as investors seek to buy and sell shares and broker-dealers seek to execute trades on behalf of their clients."

Editor's note: This article has been updated. tZERO ATS is not a cryptocurrency platform. 

Evan Niu, CFA 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.

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