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FINRA Permits Overstock.com's tZERO Retail-Brokerage Service

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Overstock.com (OSTK - Free Report) shares jumped 8.1% to close at $74.50 on Sep 10. The significant jump came on the heels of tZERO’s receipt of the Financial Industry Regulatory Authority’s (FINRA) clearance to offer retail-brokerage services for digital securities through its tZERO Markets. 

Markedly, tZERO Market is a wholly owned subsidiary of tZERO, which is again a subsidiary of Medici Ventures, a division of Overstock.com. tZERO formed tZERO Markets in May 2019 to offer certain brokerage, investment banking, placement agent and best-efforts underwriting services for traditional equities and digital securities. The service is registered with the Securities and Exchange Commission.

Markedly, FINRA’s approval will now enable tZERO Markets to offer issuers with investment banking and placement-agent services in connection with capital-raising activities.

Per tZERO CEO Saum Noursalehi, “Through tZERO Markets, we will establish a direct relationship with our customers, while also offering a streamlined experience for onboarding and trading digital securities.”

The service is expected to be available in a couple of months. Initially, the web-based version of tZERO Markets will be launched. The iOS and Android mobile applications will follow, subject to regulatory review. Moreover, the platform will initially focus on U.S.-based retail investors. It plans to gradually expand to entities and international investors.

Markedly, Overstock.com shares have returned 956.7% year to date, outperforming its Zacks Internet-Commerce peers Amazon (AMZN - Free Report) , eBay (EBAY - Free Report) and Wayfair (W - Free Report) .

Year-to-Date Performance

 

tZERO to Benefit from Overstock.com’s Top Line

Notably, tZERO focuses on the development and adoption of digital securities based on the blockchain technology. The company’s subsidiary tZERO ATS operates an alternative trading system that provides a licensed venue for matching buy-and-sell orders to its broker-dealer subscribers.

The tZERO ATS helps private companies raise capital, digitally represent ownership and trade on a regulated platform. More importantly, it provides liquidity and expands potential-investor base of an asset. The company’s pipeline comprises more than 200 issuers from diversified fields including real estate, private companies, healthcare payments, remittance, ETFs and others. Notably, tZERO’s first-half 2020 revenues of $23 million have already surpassed full-year 2019 revenues of $10 million.

Additionally, this Zacks Rank #3 (Hold) company, through its Medici Ventures and tZERO businesses, has strengthened its footprint in the lucrative blockchain-technology space. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In fact, the disruptions caused by coronavirus have demonstrated the efficacy of blockchain practices. Blockchain-based automated systems are transparent and incorruptible, and meant to provide unaltered information. The technology is now being utilized to enhance smart-payment systems, secure financial transactions, advance shipping and transportation, modernize government agencies and institutions, and even detect critical illnesses.

Markedly, Coherent Market Insights estimates the blockchain-technology market to witness a CAGR of 58.7% between 2019 and 2027. This presents significant growth opportunity for Overstock.com in the long haul.

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