Short sellers are in Nirvana with these creatures that had surged by hundreds or even thousands of percent in days after they announced a switch to “blockchain” in their business model or added “Blockchain” to their name. Their shares are now crashing.
I have written about a number of these outfits and their crazy share-price moves and their silly stock manipulation schemes on the way up. Now, not much later, here’s an update on how they’re doing on the way down.
UBI Blockchain International down 93% from the peak. UBIA had skyrocketed about 1,500% to $115 a share intraday by December 18, but has now – at $8.25 this morning – given up most of it.
This is a true gem. On January 9, the SEC halted trading in UBIA shares, citing two reasons: “accuracy” in UBI’s disclosures and very funny trading activity. This froze the share price at $22. The trading halt came 11 days after I’d lambasted the shenanigans by the company and its executives. On Tuesday (January 23), shares trading resumed – and have since plunged to $8.25.
Longfin down 70% from the peak. LFIN went public in the US in November, languished at first, but suddenly soared 2,700% over three days to an intraday high of $142.82 by December 18. This briefly gave it a market capitalization of over $7 billion. LFIN has since plunged 70% to $41.61 this morning.
What caused the surge was the December 15 announcement – a mix of gobbledygook, hype, and silliness, as I called it – that it had acquired a “Blockchain-empowered solutions provider,” etc. etc. What was not in the announcement was that the acquired “assets” belonged to a Singapore corporation that is 95% owned by Longfin’s CEO and chairman. This was disclosed in the SEC filings, but no one betting on this crazy stuff reads SEC filings.
DPW Holdings down 62% from the peak. DPW, a penny-stock dotcom-crash survivor that makes lowly power supplies for computers, catapulted its shares 880% from $0.56 on November 21 to an intraday high of $5.95 on December 18, by announcing that it would market its power supplies to cryptocurrency miners. Shares have since plunged 63% to $2.19 this morning.
Long Blockchain Corp down 61% from the peak. LBCC, at the time a failing beverage-maker called Long Island Iced Tea, got its shares to rocket by 360% from $2.06 on December 18 to $9.49 a few days later by announcing that it would change its name and ticker symbol.
On January 5, after having successfully manipulated up its share price, it announced that it would sell 1,603,294 shares in a secondary offering. That day, shares crashed 21%. On January 9, under withering pressure and unwelcome scrutiny, it canceled the stock offering. Shares are now at $3.72, down 61% from the peak.
On-line Blockchain down 35% from the peak. OBC, at the time named On-line Plc, a thinly traded penny stock in London, got its shares to spike 528% the morning after it announced that it plans to change its name. “Blockchain technology and cryptocurrencies are a new and exciting area we have been working on for some time,” it said. And this worked.
In total, OBC soared by nearly 1,000% from 14 pence to 152 pence by January 9. But in the two weeks since, they’ve given up 35% and closed at 97 pence.
Riot Blockchain down 61% from the peak. RIOT was a failing biotech outfit called Biotix with annual revenues between $100,000 and $200,000 over the past four years, generating $34 million in losses over the same period. Then on October 4, it announced that it would change its name and ticker symbol and start investing in cryptocurrency and blockchain startups.
A few days before the announcement, shares were trading at about $4.50. By December 19, they’d soared nearly 1,000% to $46.20. Since then they have crashed 61% to $17.92.
Eastman Kodak down 23% from the peak. KODK, one of the late entries into this blockchain-and-crypto stock manipulation scheme, announced on January 9 a “blockchain initiative,” including its own cryptocurrency, KodakCoin. The stock jumped 300% in two days, from $3.10 to $12.40. Amusingly, on January 8, the day before the announcement, seven independent directors awarded themselves huge stock grants. Shares have dropped 23% from the peak to $9.50.
Seven Stars Cloud Group down 40% from the peak. SSC, a Chinese video-on-demand service outfit that is traded on the Nasdaq, got its shares to spike 200% from $2.33 on December 8 to $7.00 intraday on December 26, by announcing that it took a 27% stake in The Delaware Board of Trade Holdings, a private company. Seven Starts claimed that DBOT’s Alternative Trading System is “the first and only blockchain based Alternative Trading System fully licensed by the SEC.” Shares have since plunged 40% to $4.13.
Siebert Financial Corp down 54% from the peak. The small 50-year-old New York brokerage announced on December 14 that it would expand into cryptocurrency trading. Its shares soared nearly 400%, from $4.40 to $21.64 by December 21. And that was it. Including today’s double-digit plunge, they’ve plummeted 54% from the peak, to $9.65 this morning.
There are dozens of other outfits like these out there, some of them small companies, hanging on by their fingernails, that are trying to spike their share price; others are China-based US-traded fly-by-nights; some are near-zombies going for a Hail Mary pass.
For speculators that were able to get into and out of these scams in time, it worked. A 1,000% gain obtained in a few days by hook or crook is nothing to sneeze at. But it’s ending in tears for those who got into these scams too late and whose despised fiat currency just ended up providing the exit grease for early speculators. And short sellers, the lucky ones that got the timing right, are laughing all the way to the hated legacy banks.
But not all will get the timing right. Short sellers, when they want to take profits, have to buy their shares back in order to cover their short position, and many of the stocks are thinly traded, and covering a big short position can cause shares to bounce violently. So there will be some serious snap-backs, which might take the fun out of shorting these stocks.
Are hedge funds causing the cryptocurrency rout by trying to get large sums out of an illiquid market? Read… Crypto Collapse Crushes Hedge Funds that Touted Huge Gains for 2017
https://wolfstreet.com/2018/01/25/the-40-to-90-collapse-of-blockchain-stocks/....
I still think bitcoin isn't necessarily a bubble.
ICO's however may definitely have been overvalued relative to what they were worth.
If there's one analysis which might be made of ICO's and pump and dumps, its that they both profit largely at the expense of the inexperienced and less knowledgeable. There's nothing out of the ordinary about this. This is standard in stocks and other investments. I hope people recognize it and stop buying into the "sell off" phase of bitcoin cash and other overpriced assets. It would help in different ways. Artificially inflating alts would become more difficult. Market valuation would be more accurate. And people wouldn't be taken advantage of as often. Win/win/win.
