OSTK - incredible mismanagement and risky play

14 mar 2020

OSTK has been in tumultuous times since the sudden departure of Patrick Byrne.

His handpicked successor, Jonathan Johnston, has lost in six months the market's confidence due to a series of incredible missteps:

- Announcement of retail sale have pretty much stopped, and the ship has not been turned around yet. Wayfair being in deep trouble and retrenching could be an opportunity, but the track record of OSTK management remains spotty at best
- Shares dilution continues, due to the ATM with Jones Trading, still available for 100M+
- Management team seems still reeling. They have recently announced a new CTO and a permanent CFO
- Medici and digital ventures remain a black hole, this time having raised capital from outside. The digital dividend implementation continues to remain a source of uncertainty, and Bitcoin's recent crash does not portend anything good at the horizon

On the other hand, the stock has been incredibly punished and currently hovers around $3 a share having crashed 2/3s of price in the last three weeks - and has not rebounded on March 13 (W went up 18% on the same day)

I do not believe it is going to go bankrupt in the short term, therefore I would make a speculative play going long. Positive catalysts for a rebound are:

- Overall recovery of economy and stock market in the second half of the year
- Recovery of BTC price
- Acquisition of the company