tZERO Affected by Crippling Losses Amidst Strong Fundamentals

It has been quite an impressive year for the securities token exchange called tZERO, which is owned by Overstock, an eCommerce giant. However, even though the company has broken new ground and has seen major gains in revenue throughout the year, it still appears to be struggling when it comes to profitability. Earlier this week, Overstock had released their earnings report for the third quarter of the year. The company confirmed that there had been a 97% increase in tZERO’s net revenues on a year-on-year basis. However, even though there were such impressive performances, the subsidiary still ended up losing an overall $12.4 million during this period. 

In the first nine months, tZERO reported losses worth $35.5 million, even though they had made revenues of about $34.1 million. During the same period last year, the securities token platform had made $15.7 million in revenues whereas its losses had amounted to $38.7 million. It did appear that tZERO’s fundamentals were on the rise. It had undergone significant growth in the last few months, with its monthly trading volume going from the sub-$1 million levels to $21.8 million from May to August. Some of the misfortune of the platform could be blamed on what happened in September; security token trading has suffered from a crash, but not all. 

There had been a significant fall in the markets in September, according to the Security Token Market Report. In August, the trading volume in the market was $22 million, but it dropped down to $9.15 million in September. The tZROP token that belongs to tZERO, which has a lot of equity in the alternative trading system, was able to hold up half of its total trading volume. It fell to $5.3 million in September when it had been $11.8 million August. There was also a 2% decline in the price of the asset, as it moved to $7.10 from $7.26. 

Despite facing such setbacks, tZERO will also try to cut its losses and protect itself in other areas. The company has had a good year, as it is one of the few crypto companies that had managed to get through the coronavirus pandemic nearly unscathed. The company completed a capital raise of $5 million in April, with participation from GoldenSand Capital, an equity firm based in Hong Kong. Months back, the company had received approval for launching a broker-dealer service from the Financial Industry Regulatory Authority (FINRA). 

According to a press release by the company, the approval is for a broker-dealer service called tZERO Markets for serving American retail customers. tZERO also said that it would look into offering investment banking services and placement agents in the future. The chief executive at tZERO, Saum Noursaleh, stated that the approval was a prominent milestone that would enable the company to continue its expansion. He said that tZERO Markets would enable them to build a direct relationship with their clients and also provide a more streamlined experience for trading digital securities. They are planning to launch the service in a couple of months.


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