Late yesterday, Overstock.com (NASDAQ:OSTK) announced that it is preparing to allow international customers to pay in Bitcoin. This move will make Overstock the biggest merchant to extend the crypto-currency option beyond the United States market. CEO Patrick Byrne said that starting on September 1, Overstock will make the option available on its international website.
Previously, Mr. Byrne announced that the integration of Bitcoin would add $0.04 per share to its earnings this year. Since it began accepting Bitcoin in January of this year, payments have exceeded $2 million so far. Furthermore, management previously had guided for Bitcoin payments to total between $6 million and $8 million in 2014. With international sales integrating Bitcoin as well, there is certainly a possibility of OSTK beating that guidance.
In my previous article, "Overstock: Undervalued As It Launches Initiatives With Limited Downside, But Potentially Tremendous Upside," when OSTK was trading at $13.97 per share, I outlined a path for the Bitcoin integration to improve the bottom line. EPS will benefit from savings that Bitcoin provides over credit card processors. A credit card processor typically charges 3% per transaction fee. However, OSTK has a deal with Coinbase, which charges Overstock less than 1% for processing. Furthermore, the international integration will allow for more stable revenue and business projections, as the company will face a mitigated currency fluctuation risk. OSTK is a prudent buy at this undervalued level as it launches a number of high-upside, low-risk initiatives such as accepting Bitcoin.
Disclosure: The author is long OSTK.
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