Shares in a drink manufacturer surged by nearly 300 percent in trading Thursday after the company announced it was pivoting into blockchain development.
The Long Island Iced Tea Corp., a Hicksville, New York-based drinks maker founded in 2011, pitched its decision to enter the blockchain business as taking advantage of “a once-in-a-generation opportunity” that is part of their commitment to “enhancing shareholder value.” As part of the pivot, the company also changed its name to “Long Blockchain Corp.” and intends to request Nasdaq change the trading symbol to reflect the name change.
So far, the name change is simply that. The company said in a statement that it’s investigating opportunities in the blockchain market, including potential partnerships, investments or acquisitions involving an unnamed blockchain software developer focused on fintech, an institutional provider of foreign exchange services that is building a blockchain, and a “new smart contract platform for building decentralized applications.”
The kicker with all those promises: The company does not have any agreement with any of those entities and isn’t even promising that it will. So for now, the company remains a drink manufacturer that has added the word blockchain to its company name.
Prior to the announcement, shares in the company were trading at $2.08 as apparently investor interest in drink companies had been soft, so to speak. But immediately following the announcement of its blockchain pivot, shares surged as high as $8.26, a 297 percent increase, before settling in at a slightly lower figure of $7.30 as of 8:30 p.m. EST.
To put that into perspective, the company had a $23 million market cap as of Wednesday, but only one day later, with nothing more than a name change, it has a market cap of nearly $70 million, proving that it wasn’t kidding when it said the move was related to “enhancing shareholder value.”
Long Island Iced Tea Corp. isn’t the only company to jump onto the blockchain bandwagon of late. Shares in LongFin Corp., a small New York City-based financial services company, surged as much as 2,400 percent after it announced that it had acquired a blockchain company. Shares in Rich Cigars Inc., a small cigar maker, also jumped more than 2,000 percent in trading after it announced Dec. 14 that it was changing its name to Intercontinental Technology Inc. and shifting its focus into cryptocurrency mining.
The current mania surrounding bitcoin, cryptocurrencies and blockchain tech, as represented by Long Island Iced Tea’s pivot, is being compared by some to the dot-com bubble nearly two decades ago. “It’s so reminiscent of what happened in the late 1990s,” author Scott Nations told Bloomberg. “A company that had nothing to do with the internet would put out a press release that they were going to become an internet company now and the same sort of thing would happen.”
Nations said the investor reactions confirm to him that we’re now in the middle of a new bubble.Image: Long BlockchainSince you’re here …
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