Long Island Iced Tea Corp. shares jumped close to 300 % shortly after the company rebranded itself as Long Blockchain Corp., the most recent example of a little-known microcap company gaining valuation by announcing a connection to blockchain technology. The company had a market value of about $67 million following the stock price surge.
Source: Long Island Iced Tea Corp.
Long Blockchain, based in Hicksville, N.Y. and having not posted a profit, joins a growing list of companies not previously involved in cryptocurrencies or blockchain technology who have managed to use the expanding crypto realm to fatten their capitalizations by tagging themselves as crypto in some way, Bloomberg reports. Such companies include juice, sports bras and sofa manufacturers.
Comparison To Dot-Com Craze
Some observers have compared the crypto/blockchain bandwagon effect to the dot-com boom – which eventually went bust – 20 years ago.
Scott Nations, the author of “A History of the United States in Five Crashes,” said in the late 1990s, companies with no connection to the Internet put out press releases claiming they were going to become an Internet company, resulting in increased market valuation.
Such companies that rise and fall five or 10 times in one day because they claim to be a blockchain company confirms that a bubble exists, Nations said. Long Blockchain’s shares rose from $2.44 Wednesday to as high as $9.49 Thursday, closing at $6.91 at day’s end. The stock fell below $6.00 Friday.
At one point, more than 14 million shares were traded versus an average daily volume of roughly 170,000 for the prior three months.
Also read: Fintech stock LongFin surges 2,600% following blockchain company acquisition
No Blockchain Connection Confirmed
The company to date has no agreements with blockchain technology companies, nor is there any assurance there will be.
The company’s largest shareholder is Eric J. Watson, holding 13% of outstanding shares, according to SEC documents. He is the executive chairman and founder of Cullen Investments, which has holdings in financial services, real estate, agriculture, fashion retail, sports and entertainment in the U.K., the U.S., Australia and New Zealand.
The company was created in 2015 following a merger with Cullen Agricultural Holding Corp. and has funded operations from a combination of debt and equity sales.
Long Blockchain recently canceled a share sale.
Featured image from Shutterstock.
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