Overstock Says SEC Crypto Probe Threatens Business, ICO
Overstock Hands Win to Bears With Probe Warning, Strategy Shift
(Bloomberg) -- Overstock.com Inc. didn’t disappoint the crowd of short sellers who bet against the online retailer ahead of its earnings report.
The shares plunged as much as 16 percent after the company, which has waded into cryptocurrencies, said that a previously disclosed U.S. Securities and Exchange Commission probe may hurt business and push back its initial coin offering.
“The investigation could result in a delay of the tZero security token offering, negative publicity for tZero or us, and may have a material adverse effect on us or on the current and future business ventures of tZero,” the company said in a filing late Thursday. It also disclosed that the SEC is conducting an examination of advisers at tZero, the firm’s blockchain subsidiary that’s heading the ICO.
Overstock has attracted an increasing number of bearish investors since detailing plans in September for a digital-token exchange. Nearly 45 percent of Overstock shares available to trade are being utilized by short sellers, according to financial analytics firm S3 Partners. That’s up from around 13 percent on Sept. 1.
The retailer initially disclosed the SEC probe on March 1, saying it was asked to voluntarily provide information related to its plan to offer tZero tokens. The stock has lost about a quarter of its value since then.
Chief Executive Officer Patrick Byrne also turned heads Thursday when he pledged to pursue what he called the “classic internet” model of growth at all costs after Overstock reported revenue of $456 million in the fourth quarter, down 13 percent from the same period a year before.
“We have already turned on the jets, and will demonstrate this year that our growth engine is far more efficient,” he said in a statement, referring to competitors.
--With assistance from Brandon Kochkodin
To contact the reporters on this story: Lily Katz in New York at lkatz31@bloomberg.net, Jeran Wittenstein in San Francisco at jwittenstei1@bloomberg.net.
To contact the editors responsible for this story: Arie Shapira at ashapira3@bloomberg.net, David Scheer, Dave Liedtka
©2018 Bloomberg L.P.