The legion of microcaps that have booked massive share-price gains after changing their business to focus on the crypto craze are now looking to cash in.
Long Blockchain Inc., the company known as Long Island Iced Tea until Dec. 21, waded into the secondary market Friday with an offering of 1.6 million shares at $5.25 apiece. That’s more than double the closing price on Dec. 20, and would raise more than $8 million in proceeds if successful. The announcement sent the stock tumbling 20 percent to $5.10 as of 2 p.m. in New York.
Such a move, along with stock sales by executives and insiders at other recently re-christened crypto firms, come as companies suddenly flush with equity valuations double or even triple levels from just weeks ago look to convert that currency into cash or use it to bolster the business.
Long Blockchain says it’ll use a portion of its proceeds to purchase computers capable of mining bitcoin. Marathon Patent Group Inc., an intellectual property company, watched its shares more than quadruple after announcing it’d merge with cryptocurrency miner Global Bit Ventures. A month later, it said it would issue 127 million shares to fund the deal, and then sold 1 million shares to raise about $5 million for “working capital and general corporate purposes.”
Other companies have seen founders and insiders take profits after price booms. Riot Blockchain Inc., the former biotech firm, joined the crypto craze in October, though its shares didn’t take off until mid-November when bitcoin’s price began to soar.
Chief Executive Officer John O’Rourke was granted 344,000 shares on Nov. 3, when the stock was around $7. It tripled three weeks later, and on Dec. 29, he sold 29,583 shares for just under $30 apiece, which would’ve given him a gross gain of $680,000.