A bubble tea brewed from blockchain euphoria

New York

THERE'S a new leader in the sweepstakes for the zaniest name change in the crypto craze.

Long Island Iced Tea Corp shares rose as much as 289 per cent after the unprofitable Hicksville, New York-based company rebranded itself Long Blockchain Corp. It's the latest in a near-daily phenomenon sweeping the stock market, where obscure microcap companies reorient to focus on some aspect of the mania sparked by bitcoin's 1,500 per cent rally this year.

Long Blockchain, whose business has been selling non-alcoholic beverages, says it will now seek to partner or invest in companies that develop the decentralised ledgers known as blockchain, the technology that underpins bitcoin.

The re-named firm joins the ranks of recently christened crypto companies - a list that includes former makers of juice, sports bras and sofas - whose share prices have all rocketed after their respective announcements. Some are likening the mania to the dot-com boom, and ultimate bust, two decades ago.

"It's so reminiscent of what happened in the late 1990s," Scott Nations, author of A history of the United States in five crashes, said. "A company that had nothing to do with the Internet would put out a press release that they were going to become an Internet company now, and the same sort of thing would happen." The shares surged to as high as US$9.49 before closing at US$6.91 in New York trading, compared with US$2.44 Wednesday. More than 15 million shares changed hands, compared with average daily volume of about 170,00 shares over the prior three months.

Long Blockchain has no agreements with any blockchain firms, and says "there is no assurance that a definitive agreement with these, or any other entity, will be entered into or ultimately consummated". A request for comment from CEO Philip Thomas wasn't immediately returned.

Long Island Iced Tea - which has a market value of about US$67 million after the surge in the stock price - had a net loss of US$3.9 million on sales of US$1.6 million in the three months ended Sept 30. The company has lost US$11.6 million on sales of US$3.9 million in the first nine months of the year. It has reserved the Web domain name www.longblockchain.com and will still operate a ready-to-drink beverage subsidiary.

Mr Nation said such firms can jump "five or 10 times in one day just because they say that they're a blockchain company now. To me, that just confirms that we're in a bubble". BLOOMBERG