Blockchain and Recent Company Pivots
Over past month, p/e and corresponding market cap of several stocks has soared after publicizing name or strategy changes to involve blockchain or (fin)technology — are these higher multiples deserved? What exactly about these companies is changing? We will explore a few examples. Ex) LTEA ; LFIN ; FTFT ; VPTK ; RIOT ; DPW among many others.
These businesses are using blockchain to attempt to create value in many very different ways. Microcap LTEA entered a $2mln convertible debt facility w additional $2mln option (lent by UK-based Court Cavendish Ltd), and its suggestions for the possible outcomes of its pivot are wide-ranging, seemingly to cover any possible advantageous use of blockchain: 1) partnerships, investments, or acquisitions with 2) fintech blockchain infrastructure creation, and/or London-based crypto FX trading and/or scalability for LTEA through new smart contract platform. The stock soared on a name-change and statement of intention for a strategy change with no promises or guarantees.(Read company’s release here)
Smallcap LFIN’s foray into blockchain is much more tangible — the stock soared after announcing acquisition of Ziddu.com, a startup which offers lending and ease of transactions through its own crypto coins. Ziddu offers 1) microfin lending against collateralized warehouse receipts in the form of Ziddu coins through 2) proprietary smart contracts between SMEs, processors, manufacturers, importers, exporters using cryptocurrencies across countries. How? Importers / exporters convert Ziddu coins to ETH or BTC (Ziddu coins are loosely pegged to the values of the 2 cryptocurrencies), can be used for company’s working capital needs. The company reported that interest rate on these lending transactions will vary from 12%-48% depending on risk.
Similarly to LFIN (although its product more similar to LTEA), FTFT announced one of its wholly owned subsidiaries (GlobalKey Supply Chain) entered into a service contract with Reits Technology (Beijing), where Reits will design and develop a customized “Globally Shared Shopping Mall blockchain software system” for the FTFT. CEO Xue says this will allow the company to become more asset-light and create opportunities cross-industries.
VPTK (formerly “Vapetek”) filed an 8K to reflect its name-change to “Nodechain”, the stock is now up 200% since the announcement on Wed Dec 13. It’s strategy pivot involves GPU mining and leveraging its “transparency” as a public company, per CEO Ibrahim “Nodechain Inc is a fully audited and transparent digital asset mining company capable of mining alternative cryptocurrency assets like Electroneum, Zcash, and privacy coin Monero. We store our mined Bitcoin and Ethereum in a high-security, state-of-the-art cold storage wallets. As a public company, we bring a new degree of trustworthiness to the ‘Wild West’ world of cryptocurrencies.” This accompanies the company’s newly launched website: https://nodecha.in
Below is the performance of these companies over the past year: