This too had the effect of ending the embargo against short sellers. Soon thereafter, on September 18, 2019, Overstock too relented and announced that it would modify the terms of its tZERO Dividend, and register such shares so as to avoid any lock-up. This alone had the effect of ending this short squeeze, but not before shares of the Company spiked up from $16 to almost $27.00 per share. “During the period when defendants were executing this short squeeze, and as shares of Overstock spiked in advance of the expected crypto Dividend date, however, investment banks began to make it known that they would accept cash in lieu of the crypto dividend. Shortly thereafter, however, investment banks made it known that they would accept cash in lieu of Overstock’s cryptocurrency dividend, which the complaint asserts came back to bite the defendants. The net effect of the defendants’ short squeeze, the suit says, was a bump in Overstock’s stock price in the short term. This six-month window, which the lawsuit calls a “lock-up period,” stemming from the issuance of the allegedly unregistered security resulted in short sellers being unable to deliver the security upon the surrender of their shares.Īccording to the lawsuit, because a short seller is responsible for any dividends issued during the period in which a seller has borrowed shares, the inability to obtain the locked-up tZERO crypto token “made it impossible for short sellers to maintain their short positions.” During the class period, the case goes on, Overstock’s stock was heavily shorted. a rapid increase in a stock price occurring when there is a lack of supply and excess demand, by offering a crypto token dividend “that would not be registered and could not be resold” for at least six months. The lawsuit claims that Overstock investors discovered around Septemthat the company engineered tZERO “as revenge upon short sellers,” and effectively tried to create a “short squeeze,” i.e.
#OVERSTOCK CRYPTOCURRENCY TICKER SERIES#
The plaintiff alleges that despite issuing a series of press releases, statements in SEC filings, and comments during analyst and investor conference calls promoting Overstock’s segue into being a cryptocurrency exchange and what investors could reap from the transition, the defendants failed to disclose the “extreme risks and volatility” that would crop up should the reasons behind the company’s development of tZERO in the first place be discovered. Shareholders spent more than $100 million to get tZERO operational, and were told to expect Overstock to earn “at least $17.5 million of EBITDA” by the end of 2019, the suit adds. In fact, Overstock’s resurgence was such that the company raised its year-end guidance at the start of the class period by 50 percent in the run-up to the launch of its tZERO cryptocurrency project, the lawsuit says. As the lawsuit tells it, by May 2019, the start of the class period, Overstock had “suddenly returned to profitability” on an EBITDA (earnings before interest, tax, depreciation and amortization) basis. Overstock was mired in a streak of losing money, the complaint reads, and had failed to report a new quarterly profit since Q4 2016.Īccording to the case, Overstock, realizing the nature of the market itself made it all but impossible to get back into the black, made forays into blockchain to profit from new cryptocurrency markets. The 61-page complaint looks to cover those who bought securities between May 9 and Septem(the class period).įiled in Utah District Court, the lawsuit states that Overstock was for some time hopelessly locked in a market-share battle with competitor, who the case says was willing to sacrifice billions to gain control over the retail space for furniture and bed, bath and kitchen products.
New to ? Read our Newswire DisclaimerĪ proposed class action has been filed by an stockholder who alleges the online home goods retailer and its CEO and CFO intentionally withheld from investors and the Securities and Exchange Commission (SEC) the “extreme risks and foreseeable volatility” likely to spring up should the parties’ “true intentions” behind Overstock’s tZERO cryptocurrency offering be discovered.
0 kommentar(er)
