Earlier this week, we saw a new trend on the horizon: adding “blockchain” to company names. The big question arising from this phenomenon is why? Historically, most of these companies have not had a lot to do with blockchain and the technology behind it. But, they did the name changes and they must have their reasons. Here are three things you need to know about possible reasons these companies did what they did.
Profiting On A Current Trend
Both bitcoin and blockchain are soaring in popularity and public interest. So, adding either of those terms to a company name may make the company more well-liked and trendy. According to TechSpot, “investors are falling over themselves to pour money into entities that are apparently linked to cryptocurrencies, even when they actually have little to do with the technology.” And, when investors “pour money” into something, the perceived value of that something tends to rise.
Case in point, Long Island Iced Tea Corp. The company announced last week that it is to “rebrand as ‘Long Blockchain Corp.'” As part of this rebranding, the company stated that it was in “the preliminary stages of evaluating specific opportunities involving blockchain technology.” Several potential partnerships, investments or acquisitions were mentioned. The announcement went on to say that the company does not have an agreement with any of these entities for a transaction and there is no assurance that a definitive agreement with these, or any other entity, will be entered into or ultimately consummated.
The press release assured investors that the company remains committed to improving the cash flow profile and efficiency of the beverage business through recently adopted operating initiatives.
The change in name “caused double takes on Wall Street trading floors and prompted comments on Twitter about how this must be the top of the bitcoin mania,” reported CNBC. The company’s stock value grew 200 percent on the news and it closed up 183 percent on the day of the announcement.
Pivoting To Future Technology
Another company, Future Fintech Group, this week experienced explosive growth from a previously announced pivot to cryptocurrencies and blockchain technology. This company also did a name change as part of the pivot. According to Business Insider, the company formerly known as SkyPeople Fruit Juice has been unprofitable. But, the shares “exploded as high as 221% Tuesday after the company announced it would pivot to financial technology, eventually settling up roughly 127%.”
Blockchain has been in the news a lot lately and the technology will ultimately have many uses. As described by TechGenix, “think of a blockchain as a sort of global spreadsheet or ledger.” This ledger collects important information. Different data is collected depending on what the blockchain is being used for. But, “every blockchain is distributed, uses computing resources contributed by connected volunteers, and because there’s no centralized database, it can’t be hacked.” The blockchains stay secure by use of the latest state-of-the-art encryption techniques. These techniques employ public and private keys as part of the security process.
Firms announcing a pivot to new cutting-edge technologies may be perceived as being ahead of the curve. And, this can be enticing to investors, causing company shares to increase.
Creating A Perception Of Foreknowledge
Yet another company, On-line PLC, earlier this year also changed its name. This time, the change was to On-line Blockchain PLC. As reported by Bloomberg, the share price “jumped as much as 394 percent” after the firm announced its planned name change.
In an announcement on December 18, the company declared a “change of name and new website update.” Its website goes further to explain that “blockchain technology and cryptocurrencies are a new and exciting area we have been working on for some time to provide systems to support the rollout of these technologies across a range of applications.” There was no timeline indicated for the provision of the support systems.
Firms announcing that they have been working in this area may be able to entice investors. That is if the investors perceive that the company is ahead of others in their space. If that is the case for On-line Blockchain PLC, there could be an ability to leverage experience and gain clientele. Especially if that clientele is looking for support in blockchain technology and cryptocurrencies.
Is This Really A Blockchain Bubble?
No one is sure if the recent share increases for companies that have added “blockchain” to their names is a bubble. But, investors seem to be biting on the “blockchain” name. This is causing share values to increase, even for previously unprofitable companies. What is sure is that investing in blockchain is risky now, so informed investors are needed. Having “blockchain” in the name may be a start. But, like any other investment, extensive research and knowledge of a company should be completed before any cash outlay. That way, there is no panic even if it is a bubble and even if it bursts.