- Farmingdale, New York-based beverage maker Long Island Iced Tea says it's changing its name to "Long Blockchain Corp." as it shifts its focus to investing in the technology behind bitcoin.
- Shares soar 200 in the open percent, although the company says it's only in the "preliminary stages" of evaluating potential business opportunities in blockchain.
- The company said it's still going to make iced tea and other juice beverages. As of Wednesday, it had a market value of just $23.8 million.
In a move that caused double takes on Wall Street trading floors and prompted comments on Twitter about how this must be the top of bitcoin mania, a little-known micro-cap stock called Long Island Iced Tea Corp. (LTEA) said Thursday that it's now "Long Blockchain Corp.," and its stock leaped more than 200 percent at the open of trading. Shares closed up 183 percent.
The Farmingdale, New York-based beverage maker said in a release that it is "shifting its primary corporate focus towards the exploration of and investment in opportunities that leverage the benefits of blockchain technology."
The company, however, is still going to make iced tea and other juice beverages, it said. As of Wednesday, it had a market value of just $23.8 million. In the 12 months ended in September, the company had about $5 million in sales, according to FactSet.
Even though it's named after the popular mixed alcoholic drink it appears the company sells nonalcoholic iced teas, according to its website.
A 450 percent gain, where it traded at one point in the premarket, for 9.76 million outstanding shares, according to FactSet, would still give the company a market value of only about $138 million, tiny by Wall Street standards.
The company said it "intends to request Nasdaq to change its trading symbol in connection with the name change" and has already reserved the web domain "www.longblockchain.com." The new website says the company is only in "preliminary stages" of evaluating and discussing potential partnerships, investments or acquisitions of businesses involving blockchain technology.
The U.S. Securities and Exchange Commission declined to comment. Nasdaq did not immediately respond to a CNBC request for comment. The company did not immediately return a call for comment.
"Ever since bitcoin and all the cryptocurrencies became, in my opinion, a bubble, the regulators did not take a stance on 'is this a security?'" said Sal Arnuk, co-founder of Themis Trading. As a result, "there's no action from the regulators."
The SEC has, however, stepped up its scrutiny of crypto-related markets activity. The commission on Tuesday suspended trading in shares of The Crypto Co. until early January, partly due to concerns about potential stock manipulation. The move follows temporary trading suspensions of three stocks in August due to questions about the companies' claims regarding investments in initial coin offerings or other token-related news.
The commission published an investor bulletin in July warning investors about participating in initial coin offerings. SEC Chairman Jay Clayton also issued a lengthy statement earlier this month about the dangers of investing in cryptocurrencies and initial coin offerings. "If you choose to invest in these products, please ask questions and demand clear answers," he said.
The Financial Industry Regulatory Authority on Thursday issued an investor alert on "cryptocurrency-related stock scams."
"Don't be fooled by unrealistic predictions of returns and claims made through press releases, spam email, telemarketing calls or posted online or in social media threads," the alert said. "These actions may be signs of a classic 'pump and dump' fraud."
The "Long Blockchain Corp." name change is just the latest in a line of companies making questionable moves to ride the euphoria surrounding bitcoin and the blockchain technology backing it. Most of these moves, if not all, involve risky, small stocks that have little volume and fly under the radar of the typical investor ... for good reason.
Amazingly, this is already the second case of a company that sells beverages to see a pop in value because of speculation surrounding bitcoin.
"It's a testament to greed," Arnuk said. "For speculators today, the game is bitcoin. A few years ago it was marijuana stocks."
"There's going to be more. Get your snark ready."