Overstock Suffers From SEC Probe into ICO, Q1 Woes

Shares of e-commerce platform Overstock.com Inc. (OSTK) crashed Friday, falling as much as 16.4% in early trading and easing up to a 8.9% loss as of early afternoon at $43.85. While Friday's plummet brings OSTK's value down over 31% year-to-date (YTD), far underperforming the SP 500's 3% gain over the same period, the stock still reflects a whopping 148% increase through the past 12 months as investors have continued to highlight prospects for the company's cryptocurrency business. (See also: Square to Soar on Crypto Potential, Say Bulls.)

On Thursday, the online retailer reported a 13% decline in fourth-quarter revenue to $456.3 million and a 3% dip in full-year 2017 sales to $1.745 billion, attributing the miss to heightened competition from home goods retailer Wayfair Inc. (W), alongside a a slump in online search. Management indicated that the firm is expecting a "terrible Q1" and that investors shouldn't hold their breath as improving results shouldn't materialize until the second half of the year. The Street was also disappointed in a lack of progress on a potential sale of Overstock's retail business. As the company plans to double down on its crypto-related business, bulls' high targets have relied on the fact that Overstock indicated it is considering strategic alternatives for its e-commerce segment. 

SEC Eyes Overstock's ICO

Also on Thursday, Overstock told investors that the Securities and Exchange Commission (SEC) was investigating the company's plans to raise funds through an initial coin offering (ICO)

The reports comes as just a week ago, the SEC indicated that it is seeking more heavy regulations on the cryptocurrency space, sending bitcoin, the world's largest digital coin by market capitalization, down on the news. The announcement was particularly discouraging for the Salt Late City-based company, which saw its stock soar to recent highs as investors continually applaud its foray into the crypto space. In December, just days before the company's cryptotrading went live, shares surged on news that Morgan Stanley bought a 11.4% stake in the company (See also: Bitcoin: Overstock Surges on Morgan Stanley Stake.)

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