It has become apparent that virtually every publicly traded company wants to get involved in blockchain technology. Doing so seems to give company share prices a healthy boost, although not all of these decisions work out well in the end. In the case of Longfin, its stock price is plummeting, and it will be removed from the Russell 2000 and 3000 indices very soon.
Longfin Takes a Gamble and Loses
Truth be told, various companies have tried to make their blockchain plans public as a way to artificially increase their stock prices. For some companies, the decision has worked out, whereas others are struggling right now. The SEC will continue to look into companies exploring this option, though, as very few firms actually touch blockchain technology after making their plans clear.
For Longfin, the decision to acquire Ziddu certainly gave its stock price a healthy boost at first. For those who are unaware, Ziddu is a company which offers a marketplace solution for smart contracts. It sounds like it has a lot of potential, even though there is no real reason why such a firm should be acquired by Longfin. After all, the latter company has no intention of working with blockchains or any technology which stems from them.
As such, it is only normal that the hype associated with this particular decision died down pretty quickly as more and more investors began to realize that Longfin was not necessarily going to do anything with the smart contracts. However, that is only one of the concerns as of right now, as the company will also be removed from the Russell 2000 and 3000 indices, albeit for a completely different reason.
More specifically, FTSE Russell doesn’t take kindly to Longfin making under 5% of the company shares available to the public. As of right now, just 2.5% of the company’s shares are in circulation, which is a very small amount, all things considered. Failing to meet this minimum requirement of FTSE Russell more than warrants the company’s shares being delisted, even though it remains to be seen how that will affect the firm as a whole.
What makes this story even more intriguing is that Longfin seemingly decided to pull a fast one. More specifically, its IPO concluded two days prior to announcing the acquisition of Ziddu, which quickly pushed the company’s stock price from $5 to $73. Since that time, however, the prices have dropped back down to $17 and may continue to fall for some time to come.
Whether or not Longfin will make good on its blockchain plans remains to be seen. It seems highly unlikely they will do so, even though they still own Ziddu as of right now. Rest assured the SEC may want to look into this matter, although it remains to be seen if anything will come of it moving forward. Companies throwing the term “blockchain” around willy-nilly are certainly in the crosshairs.