E-commerce retailer and blockchain investment firm Overstock has shelved plans to hold a secondary stock offering after the company’s share price plunged in response to the announcement.
The Wall Street Journal reports that although Overstock was “pleased” with the interest in the offering, market conditions forced the company to terminate the sale.
“Given the market volatility and price we are terminating the offering,” Overstock President Saum Noursalehi told the publication in a statement, adding that the firm had conceived of the offering as an “opportunistic financing.”
Though best known as an e-retailer, Overstock has been investing in blockchain and cryptocurrency startups for several years through Medici Ventures, its wholly-owned subsidiary. Medici has roughly a dozen portfolio companies, including Factom, Ripio, and tZero — which is in the middle of an initial coin offering (ICO) that Overstock expects will raise $250 million.
Due to its involvement in the blockchain space, Overstock has been characterized by some analysts as a “proxy stock” for cryptocurrencies. Its share price, unsurprisingly, has behaved accordingly, rising and falling along with the cryptocurrency market writ-large.
In early January, Overstock shares peaked at an all-time high of $86.90. Since then, it has plummeted by 62 percent to a present value of $32.57.
This decline has largely tracked with the decline seen across the cryptocurrency markets. Bitcoin, for example, is down approximately 60 percent from its high-water mark.
However, there were two triggers that were Overstock-specific.
First, Overstock revealed that the Securities and Exchange Commission (SEC) is investigating tZero’s ICO as part of its broad inquiry into the nascent fundraising model. CEO Patrick Byrne has stated that the firm was not issued a subpoena – as many ICO operators were – but has been submitting documents voluntarily. He has also maintained that tZero’s offering complies with federal securities laws.
The second trigger was the secondary stock offering, through which Overstock had planned to issue four million new shares. The company’s share price fell by 10 percent on the news since the offering would have diluted the value of the currently-existent 29 million shares.
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Last modified: May 20, 2020 8:55 PM UTC