Overstock.com Inc (NASDAQ: OSTK) is having an incredibly strong start to the trading session this morning, and for good reason. Along with its earnings report, the company announced a large investment coming from a private-equity firm. Today, we’ll talk about:
- The news;
- what we’re seeing from OSTK stock as a result; and
- what we’ll be watching for ahead.
OSTK Announces Earnings And Private Equity Investment
As mentioned above, Overstock.com is having a strong start to the trading session this morning. While the company released earnings the gains have little to do with earnings and more to do with a private equity investment. In the press release, the company said that the Hong Kong-based private equity firm, GSR Capital has agreed to invest in the company and its blockchain unit known as tZero. In the announcement, OSTK said that GSR plans on investing up to $374.55 million in exchange for a mix of tZero and Overstock.com shares.
The company also said that under an agreement, GSR Capital will buy $30 million in tZero security tokens from the company as well up to 3.1 million shares of Overstock.com at a 5% discount to the closing price as of August 1, 2018. OSTK said that GSR will also be investing up to $279 million for up to 18% of tZero equity at a valuation of $1.5 billion. In terms of earnings, here’s what we saw:
- Loss – The company generated a loss of $2.20 per share that proved to be far wider than analyst expectations of a loss of $0.29 per share.
- Revenue – Revenue for the quarter came in at $483.1 million with analysts expecting revenue of $474 million.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dig into the market is that the news leads to moves. In the case of Overstock.com, the news proved to be positive. While the company posted a wider loss than expected, the investment of hundreds of millions of dollars into the company from GSR proved to be a source of excitement. Of course, our partners at Trade Ideas were the first to alert us to the gains. Currently (7:53), OSTK is trading at $46.40 per share after a gain of $7.80 per share or 20.21% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on OSTK. In particular, we’re interested in following the company’s use of the funding that was announced today as well as the growth of the tZero side of the business. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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