By Anora M. Gaudiano, MarketWatch
Early investors in LongFin Corp, which began trading last week on Nasdaq, were in for a big windfall as the stock surged after buying blockchain technology provider Ziddu.com.
It was a wild ride, however. By noon on Monday, the stock skyrocketed to a high of $142.82, but since retreated to close at $72.38, which still marked a gain of 229% and values the company at more than $4 billion. Last week, its market capitalization was around $265 million.
Such mania echoes the surging but volatile price action in the cryptocurrency world, where bitcoin /zigman2/quotes/31322028/realtime BTCUSD +0.80% has surged more than 900% in 2017 to trade above $18,000 and ethereum has risen more than 10-fold to trade near $770. That has stirred interest in the blockchain technology that underpins all cryptocurrencies while also prompting numerous warnings of a potential bubble.
It’s unclear whether anyone has yet profited from the stock’s jump. Insiders, including executive and early investors usually have lockup periods ranging from 90 to 180 days before they are allowed to sell their stock. LongFin didn’t immediately respond to emails seeking comment.
LongFin /zigman2/quotes/204920859/delayed LFIN 0.00% describes itself as “a global fintech company providing finance and [foreign exchange] hedging solutions to importers, exporters, small and medium enterprises across the globe powered by artificial intelligence and machine learning.”
LongFin began trading on Nasdaq on Wednesday and closed at $5.15 on its first trading day. By the end of the week it closed at $39, having risen nearly eightfold.
On Monday, LongFin stock shot into the stratosphere, after it announced that it acquired Ziddu.com, a blockchain technology provider that offers microfinance lending. .
LongFin joins a number of small companies that have seen their share prices rise by a factor of ten in weeks of months after announcing affiliation with blockchain technology. Simply adding the word “blockchain” or “bitcoin” to the name of the company has achieved rapid stock price appreciation as well for some of these companies.
Firms such as Riot Blockchain /zigman2/quotes/209538617/composite RIOT +4.31% , formerly a biotechnology firm, or HIVE Blockchain Technologies /zigman2/quotes/202324457/delayed CA:HIVE +13.66% , which used to be a gold-mining company, saw their shares rise five to 10-fold over the past several months.
A rapid rise in stocks such as LongFin is reminiscent of internet frenzy of the late 1990s, when companies, seemingly without a viable business models went public, making their founders paper millionaires.