Overstock.com, Inc. (NASDAQ: OSTK) shares jumped as much as 21% in after-hours trading on Thursday after the e-commerce retailer announced that Hong Kong private-equity firm GSR Capital will invest up to USD 270 Million into Overstock's blockchain subsidiary tZero.
The investment by GSR Capital will be made at a valuation of USD 1.5 Billion, giving the private equity firm an 18% stake in tZero. GSR Capital will also purchase USD 30 Million worth of tZero security tokens from Overstock.
The stock rose 4.47% during the trading day and closed at USD 38.60 per share.
“We are honored to have GSR Capital as a strategic investor," said tZERO CEO Saum Noursalehi in a statement. "The tokenization of securities has the potential to disrupt global capital markets responsible for moving hundreds of trillions of dollars. Together with our partners, we will globalize our blockchain-based platform, bringing more efficiency, liquidity, and trust to capital markets."
Overstock launched the tZero cryptocurrency via an initial coin offering on Dec.18th of last year.
In a letter to shareholders, Overstock Chief Executive Officer Patrick Byrne acknowledged that "recently an investor lamented to me that Overstock is among the most difficult-to-value stocks on Wall Street."
Byrne called that "regrettable" but stressed that the crypto-related units could justify a higher price. He wrote that it is "becoming increasingly important to elucidate the different parts of our business and their potential value."
Byrne also hinted in the shareholder letter that Overstock will start to spend less on its retail unit as a way to stem the Company's overall losses.
"Given the rapidly growing value of our non-retail assets, we think shareholders are better served now by a cash-conservative strategy. I believe Overstock can focus on developing more non-traditional means of growth and profitability," he said.
Byrne added that the Company is still looking for a possible buyer of the retail business, and that "discussions with potential buyers have progressed."