Overstock.com appears to be one of the many overlooked tech stocks that is extremely undervalued. As we said in an article last year, based on several key business elements, we believe (NASDAQ:OSTK) is a value buy and a long term play. While day to day operations, earnings, and other variables keep this stock off the radar of most investors, there can be a day that puts Overstock.com on the map - which can happen any day. It can be a news release related to a blockchain related order, or a new contract where Overstock.com is supplying the technology to a huge vendor.
Here's one reason why we believe this company is overlooked. Even in December, when the company received exposure on equities.com, the description failed to mention blockchain or overstock.com's other tech assets:
Overstock.com Inc is an online retailer offering closeout and discount brand and non-brand name merchandise, including bed-and-bath goods, home décor, kitchenware, watches, jewelry, electronics and computers, apparel, and designer accessories.
Overstock.com Inc. is based out of Salt Lake City, UT and has some 1,900 employees. Its CEO is Patrick M. Byrne.
It is true, that Overstock.com's core business is, and has been, online retailing. But Overstock.com isn't likely to take over Amazon (NASDAQ:AMZN) anytime soon. But Overstock.com has diversified into so much more than online retailing. Blockchain and related technologies, are no doubt going to be the game changer technology in financial services in the coming decade.
See a recent release about Overstock.com's blockchain technology:
Overstock.com, Inc. (OSTK) has reached a new milestone in its efforts to bring Wall Street and bitcoin pioneered crypto-revolution closer. The world's first trading portal for the exchange of securities on blockchain technology is ready and has been built by Overtstock.com's majority-owned fintech subsidiary t0. Overstock.com recently announced approval of a non-transferable rights offering by its board of directors which allows its stockholders of record to purchase shares of its preferred stock, including preferred shares to be issued and traded exclusively on a registered alternative trading system using the t0 issuance and trading platform.
Like much disruptive technology, it's hard to see which company will be 'the one' that leads the herd in tech that most agree will be a dominating factor in the future of an industry. For every Google (NASDAQ:GOOG) there's a hundreds perhaps thousands of failures. But Overstock.com has a track record of success, and isn't any neophyte when it comes to the markets.
Take a look at another one of Overstock.com's technology acquisitions in the financial field, from 2 years ago:
Overstock.com, Inc. (Nasdaq:OSTK) announced today that it has entered into agreements to acquire a group of related, privately held financial technology companies, and has closed the acquisition of the assets of one of those companies. These acquisitions were made through Overstock's t0 subsidiary. This transaction is a pioneering development in connecting crypto capital markets to existing national markets.
SpeedRoute currently routes approximately 2.5 percent of U.S. equity order flow. The acquisition of SpeedRoute and its underlying technologies positions Overstock to connect t0 trading to the entire U.S. equity market. The combination of SpeedRoute's infrastructure and critical mass connectivity with the t0 blockchain software plugged into the U.S. equity markets creates a paradigm-changing moment for capital markets, stated Overstock officials.
That's from August of 2015. 2.5 percent of the US equity order flow is not insignificant. These are just a few of Overstock.com's assets, there are others.
Plus, they are using technology in their own operations. Checkout a recent interview on reason.com with Patrick Byrne - he'll explain about the tech renovations being implemented on Overstock.com itself, and as well - they even have an option to pay their employees in Bitcoin. Although he says, they need to convert Bitcoin they accept for payment for items as their vendors mostly need US Dollars.
Also he mentions that the regulators are working with Overstock.com because of the fact that blockchain technology can "end a lot of Wall St. mischief" in the words of Patrick Byrne. For someone who is generally anti-regulation and a self-professed Libertarian "pro-freedom" - working closely with draconian regulators is a significant positive sign, and that they have approved various blockchain technologies pertaining to securities transactions - it's a game changer.
It seems that it's only a question of time when one of these disruptive technologies is going to pop and change Wall St. forever. This is called the "Jump Point" by social media experts; or 'going viral.' They're in the right position, it seems only a matter of time.
Finally, Overstock.com seems to have a group of haters. If they are paranoid it seems for good reason. Authors and traders on large media sites seem to dislike Overstock.com for no particular reason. See this article on fool.com that compares Overstock.com (OSTK) to Amazon (AMZN):
Overstock should only appeal to ambulance chasers and fearless speculators. Long-term investors are far better off with the hungry hyper-growth of Wayfair or the mature market-defining authority of Amazon.
Ambulance chasers? What possible connection do 'ambulance chasers' have to a stock that is depressed - other than in the mind of the foolish author who can't articulate his reasons for his dislike of the stock in an erudite manner. There's no question that Amazon is the 800lb guerilla powerhouse - but it's not fair to compare it to Overstock.com . The market cap of Overstock.com is less than 500 M as of this writing, with a P/E of 45. Amazon's market cap is a whopping 378 B but with a P/E of 182! What's up with that? If we multiply the current share price of Overstock.com by the difference in the P/E ratios which is 4.04 we get an Overstock.com share price of more than 68! It's not hardcore equity analysis, it's simple math a child can do. It's not necessary to have a degree from Wharton to see there's value in Overstock.com considering such glaring mathematical anomalies such as the P/E ratio discrepancy with its peers.
Combined with the fact that Overstock.com is sitting on a powder keg of potentially disruptive FinTech - we believe that Overstock.com is going to over-perform in 2017.
Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in OSTK over the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.