Overstock Stock Drops 40% in 2020 Amid CEO FBI Investigation Revelation – Key Support Levels at $14 and $9

Overstock.com, Inc. (OSTK) experienced a significant decline in its stock price, dropping over 20% in a single session after CEO Patrick Byrne revealed his involvement in the FBI's investigation into the 2016 election. This unexpected announcement has stirred uncertainty among investors and analysts alike.

Tom Forte of DA Davidson highlighted the potential negative impact of Byrne's controversial involvement on Overstock's operational performance, though he continues to recommend a Buy rating on the stock. Forte emphasized that while the CEO's actions have introduced volatility, Overstock's core e-commerce business has returned to positive cash flow, and its blockchain and e-commerce assets remain strategically strong.

Recently, Overstock made strides in democratizing investment by allowing its preferred equity security tokens, tZero, to be resold to non-accredited investors. However, these efforts face scrutiny amid ongoing SEC investigations into tZero and broader regulatory crackdowns on initial coin offerings (ICOs).

Technically, OSTK's stock has fallen nearly 40% since the CEO's statement surfaced earlier this week. The Relative Strength Index (RSI) dropped to 39.67, nearing oversold conditions, while the Moving Average Convergence Divergence (MACD) indicated a bearish crossover. These signals suggest further downside potential before a possible recovery rally.

Investors should monitor critical support levels at the 50- and 200-day moving averages near $16. A breakdown below this point could push the stock towards stronger support zones around $14 and previous lows near $9. Conversely, a rebound could see resistance near $20, potentially leading to a retest of recent highs.

Note: The author holds no direct position in Overstock.com, Inc. shares outside of passively managed index funds.

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