Few companies leave investors as baffled as Tesla (NASDAQ:TSLA). The electric car company shocked the Street when it entered the solar power market, and sister company SpaceX actually stands closer to CEO Elon Musk's ultimate vision than Tesla does. Tesla's shares are highly volatile because of the company's unpredictable business moves, and the stock has gained a heart-stopping 348% over the last 52 weeks.

Overstock.com (NASDAQ:OSTK) plays a similar role in the online retail sector.

I'm not kidding. Overstock is easily misunderstood and often incorrectly valued, giving investors a chance to benefit from a deeper understanding.

Over the past year, Overstocks' share prices rose by 134%. But if you managed to buy Overstock's stock near the market bottom in March, you're looking at a majestic 966% bounce from those 52-week lows. Timing Tesla's stock perfectly basically amounts to holding the stock all year long. The maximum gain from July's lows stops at just 355%.

A young businesswoman frowns and shrugs.

Image source: Getty Images.

What's so confusing about Overstock?

You might think of Overstock as a smaller e-commerce store in the mold of Amazon.com (NASDAQ:AMZN) or JD.com (NASDAQ:JD). That used to be the case. Overstock started out as a pure play on online retail operations, based on a low-cost business model that involves the selling of excess inventory from factories and other retailers at discounted prices. That's all in the company's name, so many investors don't really look any further. If you want to invest in a great online retailer, it's kind of hard to beat the best. Just stick to Amazon or one of its international rivals.

But then you're missing out on the most interesting part of Overstock's current business. Its tZERO and Medici Ventures divisions both fall under the banner of financial technology businesses. Medici Ventures invests in a variety of start-ups in the blockchain technology space and tZERO operates a blockchain-based trading platform for various securities.

How important is the fintech business?

tZERO was hot stuff in 2017, when cryptocurrency prices were skyrocketing and even downright silly companies could double or quadruple their stock prices in short order just by claiming to have some sort of blockchain-related business idea. These days, Overstock's blockchain businesses account for roughly 3.5% of the company's quarterly revenues. tZERO actually runs a trading platform where investors can trade digital tokens in a system that's similar to a stock market, but with secure transaction tracking based on the blockchain technology that makes the market tick.

It's not a huge business yet, and I have only seen two stock-like tokens on the tZERO platform so far. One is a token representing Overstock and the other is a token-based way to invest directly in tZERO itself. But you have to start somewhere. Overstock's ambitions for tZERO don't stop there and the company is actively looking for more assets to trade and manage using tZERO tokens.

Close-up view of a steel chain where one link is covered in cryptographic data.

Image source: Getty Images.

"We connect issuers looking to raise capital and access liquidity with investors interested in trading these securities," said tZERO CEO Saum Noursalehi in Overstock's fourth-quarter earnings call. "For example, in the fourth quarter, we signed an agreement with Alliance Investments to tokenized $25 million of River Plaza, a commercial real estate project in Manchester. Upon concluding their capital raise, which is in progress, we intend to tokenize the asset and have it trade on the tZERO [Alternative Trading System]."

Many other types of capital assets can benefit from a tokenized trading platform like tZERO. Company capital and real estate assets are solid starting points, but this market could eventually be used for tracking ownership in things like art, intellectual property, and industrial machinery.

Where does Overstock go from here?

Overstock has considered breaking the blockchain business apart from the online retail division, but that idea lost most of its shine when cryptocurrency prices crashed in 2018. Digital coins and blockchain technologies are gaining steam again in 2020, and Overstock is in a better position to take advantage of a healthier market this time.

Forgetting about Overstock's blockchain operations is a big mistake, kind of like assuming that Tesla always will focus on electric cars even though Elon Musk has made it perfectly clear that he really wants to run a battery business and send humans to Mars. Both companies have much broader ambitions than the simple e-commerce and electric car ideas that took them this far.

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.