Want to increase company value on the open market? Just change your name to something blockchain. At least, that worked for the Long Island Iced Tea Corp after changing its name to Long Blockchain Corp.
In what is the most 2017 thing ever, company shares soared by as much as 500 percent in pre-market trading this morning after the company announced the name change, settling back to about a 275 percent gain.
Up until this morning, Long Blockchain was a little-known company making non-alcoholic lemonades and ice teas. As of Wednesday, the company had a market value of just $23.8 million, but at one point in pre-market trading had 9.76 million outstanding shares, giving the company a market value of close to $138 million. That’s small by Wall Street standards, but significant considering the only factor seemed to be the name change.
Much of the growth is owed to bitcoin mania. Not a day goes by, it seems, we don’t hear of some new hike in the cryptocurrency’s price.
Bitcoin-related stocks like NVIDIA and AMD are capitalizing on the craze, but so are little-known companies like Riot Blockchain, which was a struggling biotech company that had gone through several name changes (most recently Bioptix) but saw a smaller, yet phenomenal rise in share price after switching focus to crypto and adding “blockchain” to the name.
Long Blockchain plans to follow in a similar path. It still plans to sell non-alcoholic ice teas and lemonades as a subsidiary but now says it will be mainly seeking to partner or invest with companies involved in blockchain technology and would like NASDAQ to change the company’s trading symbol to reflect the new effort.
Though the company says it doesn’t have any agreements in place, the company has switched its domain to http://www.longblockchain.com and the new site says Long Blockchain is in the “preliminary stages of evaluating specific opportunities.”
Long Blockchain is just the latest in little-known micro cap stocks capitalizing on blockchain to spin heads on the trading floor, leaving some investors worried about possible fraud and unmerited valuations.
The U.S. Securities and Exchange Commission has been clamping down on other small stock companies that’ve profited from crypto name changes. For instance, the SEC suspended trading in shares of The Crypto Co., which saw a surge in stock price by as much as 17,000 percent in the last three months after announcing plans for a roll out of a crypto trading floor. The SEC suspended the trading in the company until January, citing “concerns regarding the accuracy and adequacy of information.”
It’s unclear what actions, if any, the SEC would take for Long Blockchain, however. The company could not be reached at this time and so far we have not heard back from the SEC for comment.
One thing is sure, though, this type of activity reflects a very weird and wild crypto ride this year.