People wary about buying Bitcoin due to its wide price fluctuations, lack of intrinsic value and risk of becoming the next big bubble to burst may instead prefer to invest in companies seeking to offer new applications based on the blockchain technology that makes cryptocurrencies possible.
To gain an appreciation of the impressive potential offered by blockchain technology, I obtained an exclusive interview with Tom Forte, a senior research analyst with investment firm D.A. Davidson & Co. Forte, who focuses on consumer internet companies, told me that he boosted his price target on Salt Lake City, Utah-based Overstock.com, Inc. (Nasdaq: OSTK), to $110 a share from $85 a share on Jan. 8 due to its promising blockchain businesses.
While speaking to me by phone on Jan. 12 as he attended the Consumer Electronics Show (CES) in Las Vegas, Forte said, ???As someone who has come to the CES for many years, what is missing is blockchain.???
The lack of consumer products based on blockchain technology shows its potential is just on the cusp of getting tapped. The opportunity with blockchain also indicates why Overstock.com management recently hired Guggenheim Capital LLC to explore the company???s ???strategic alternatives.??? The possibilities include combining its home e-commerce business with a brick-and-mortar retailer or a recapitalization.
I expect that Overstock.com???s home e-commerce business could be sold to raise capital to help fund start-up businesses the company has launched through its Medici Ventures unit. Online retail is a highly competitive business that has proven difficult for many participants to turn a profit in, and blockchain technology is a potential game changer that could produce big returns on investment.
To arrive at his $110 price target, Forte retained the same $58 per share valuation he previously placed on Overstock.com???s legacy home e-commerce business, but he raised his outlook for the company???s Medici Ventures segment to $52 a share, up from $27 a share. Forte explained that the company???s Medici Ventures holdings offer the ???best portfolio??? of blockchain-related assets among existing public companies.
???Years from now investors, will look back and recognize blockchain as wildly disruptive,??? Forte told me.
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