Shares of Overstock.com (NASDAQ: OSTK) jumped on Friday after the company reported its second-quarter results and announced an investment in its tZERO subsidiary. As of 12:25 p.m. EDT, the stock was up 18.1%.
Overstock reported second-quarter revenue of $483.1 million, up 12% year over year. The company posted a net loss of $2.20 per share, driven by a more than doubling of sales and marketing expenses. Overstock is spending heavily on sponsored search, television, and display ads to increase its sales.
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That massive increase in spending was entirely overshadowed by news regarding Ovestock's tZERO blockchain subsidiary. GSR Capital has agreed to invest up to $270 million in exchange for as much as 18% of tZERO's equity. That puts tZERO's post-money valuation at $1.5 billion. GSR also agreed to buy $30 million of tZERO security tokens and 3.1 million shares of Overstock. This deal replaces a previous agreement reached in June .
"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," said tZERO CEO Saum Noursalehi.
Overstock's core e-commerce business grew during the second quarter, but only because the company hurled cash into marketing. Overstock's GAAP operating loss through the first six months of the year totaled $120.9 million, about 13% of revenue.
Investors seemingly didn't care at all, instead pushing the stock up due to the tZERO news. Only time will tell whether Overstock's blockchain efforts ever produce real results.
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