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| Taken From Cointelegraph |
Loss, but stock prices
Overstock did a great job in 2017. Shares rose from $ 17.70 at the beginning of the year to $ 53.15 at the close of November 10, or 200%. After the company reported a pretax loss of $ 6.5 million in the third quarter of 2017, its share price soared 30% on Thursday. The bottom line seems to have nothing to do with the market valuation of Overstock. This optimism stems from the belief that Overstock will eventually be rewarded for its investment in blockchain technology.Overstock's ICO program also seems to have stimulated the market.
Should Overstock shift the focus to the blockchain?
In terms of valuations, the stock market seems to have neglected Overstock's core business of selling household goods and apparel. The whole point seems to be the ICO and investment in the blockchain area. The market seems to be really pleased that Overstock has changed its home electronics business. DA Davidson analyst Tom Forte raised his price target for Overstock from $ 57 to $ 85. In the client's report, Tom Forte wrote:
We now see the potential to unlock value in its two most important assets, home-e-commerce and Medici Ventures, a portfolio of nine companies that leverage the blockchain to varying degrees.
Unpredictable market
Although the main goal of corporate management is to raise shareholder value (and increase market value), they should remember that the market is a fickle animal. Earlier this month, a company rose 400% after it changed its name from On-line Plc to On-line Blockchain Plc.Therefore, changing a company's strategy based on the latest fashion may not be a good way to drive shareholder value over the long term. Although Overstock may transform itself into a blockchain company, this should not be why the blockchain company is highly valued by the market.
Amazon started from the bookstore
While the idea of Overstock, the online retailer of homeware and apparel, shifting its core business looks radical, there is no precedent. Founded in 1994, Amazon started as an online bookstore but has now surpassed its conviction. It earned about $ 16 billion in sales of cloud computing services alone. Nokia, the main seller of cell phones in 2000, was a pulp mill founded in 1865. Many companies are changing themselves with the times. If Overstock does shift its focus to blockchain business and succeed, then few should remember that it was initially an online retailer.
Unpredictable market
Although the main goal of corporate management is to raise shareholder value (and increase market value), they should remember that the market is a fickle animal. Earlier this month, a company rose 400% after it changed its name from On-line Plc to On-line Blockchain Plc.Therefore, changing a company's strategy based on the latest fashion may not be a good way to drive shareholder value over the long term. Although Overstock may transform itself into a blockchain company, this should not be why the blockchain company is highly valued by the market.
Amazon started from the bookstore
While the idea of Overstock, the online retailer of homeware and apparel, shifting its core business looks radical, there is no precedent. Founded in 1994, Amazon started as an online bookstore but has now surpassed its conviction. It earned about $ 16 billion in sales of cloud computing services alone. Nokia, the main seller of cell phones in 2000, was a pulp mill founded in 1865. Many companies are changing themselves with the times. If Overstock does shift its focus to blockchain business and succeed, then few should remember that it was initially an online retailer.
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