2018: Year of the Blockchain Pivot

December 29, 2017  |  Michael Reilly

UBI Blockchain Internet (OTC:UBIA) is a Hong Kong-based company headed by executives who, prior to starting their “blockchain” enterprise, headed a company that manufactured an anti-bedwetting patch called the UrinStopper.

UBIA has  $15,406 dollars cash on hand, $6.3 million in debt, 18 employees, $0 revenue, a disconnected phone number…

…and a market cap of $3.7 billion.

On Tuesday, the company announced a three-for-one stock split. The CEO plans to sell 40 million shares.

UBIA is but one more example demonstrating investors’ hunger for all things blockchain — and the stocks many of these investors are putting in their portfolio are extremely risky.

In last week’s ADAPT Weekly, we warned about two companies, RIOT Blockchain (RIOT) — formerly Bioptix, Inc — and Marathon Patent Group (MARA).

Both companies had announced they are pivoting from their old business models into blockchain and cryptocurrencies — and their stock prices skyrocketed, even with no new sales or profits to show.

Not 24 hours after we published our article, CNBC also issued a warning for investors to watch out for companies changing their names just to capitalize on blockchain mania.

But investors yawned at the warning. Prices pulled back during the recent Bitcoin selloff, but they are again headed upward:

RIOT and MARA are hardly alone.

From iced tea to blockchain

On December 21, Long Island Iced Tea Corp (LTEA) announced that it’s changing its name to Long Blockchain Corp. The price nearly quadrupled on the news:

According to the press release, the “company is shifting its primary corporate focus towards the exploration of and investment in opportunities that leverage the benefits of blockchain technology.”

In other words, they’ve announced a change of business model, but so far, there are no results.

Apparel company goes crypto

The Crypto Company (OTC:CRCW) went public earlier this year after a reverse takeover of Croe Inc, a women’s apparel company.

Were investors skeptical? Not at all. With the news of a planned cryptocurrency data company acquisition, CRCW’s price rose more than 2,700% this month alone.

The Crypto Company website states the company offers blockchain consulting, proprietary technology to develop cryptocurrencies and blockchain infrastructure, and also holds a portfolio of digital assets.

On December 13, the company announced a 10-for-1 stock split. Six days later, the SEC halted trading of shares until January 3, citing concerns about transparency and possible price manipulation.

But wait, there’s more:

  • Nova LifeStyle (NVFY): The furniture maker launched a blockchain subsidiary called “I Design Blockchain Technology Inc” last Wednesday “to establish a trusted digital ecosystem that links the experiences of independent product designers, customers and manufacturers with Nova-branded products on a creative global digital platform powered by Blockchain technology.” The platform will accept bitcoin and other cryptocurrencies on the platform.

  • Rich Cigars Inc (OTC:RCGR): The tobacco distribution company filed Tuesday to reorganize as Intercontinental Technology Inc. According to a press release, the company intends to develop patent-protected products and mine Bitcoin and other cryptcurrencies.

  • Vapetek Inc (OTC:VPTK): On December 20, the e-cigarette maker announced that it is changing its name to Nodechain Inc. The press release states that Nodechain “has acquired high-powered GPU-based cryptocurrency mining rigs to immediately begin its new cryptocurrency mining business operation.”

These are but the most recent additions to the list of companies that have rebranded themselves over the past year.

More companies are likely to pivot from to cryptocurrency and blockchain technology in 2018, and we expect the market to reward them with upward price movement.

But are they good buys?

No — for now, these companies are very high risk. We’ll keep them on the radar. Some might prove themselves over time. Others might be outright scams.

Take LongFin (LFIN), a small-cap fintech company that had its IPO on the Nasdaq on December 13.  Two days later, it bought Ziddu.com, a blockchain-powered micro-lender that transacts only in cryptocurrencies.

After the announcement, Longfin’s stock soared more than 2,000% over two days.

As it turns out, LongFin CEO Venkat Meenvali owns 95% of Meridian Enterprises, the company that sold Ziddu.com to LongFin for 2.5 million restricted Class A shares.

Bloomberg article quotes Meenvalli’s response to the surge:

“It’s crazy, frenzied speculation on the cryptocurrency announcement, which we never expected. The fundamentals will slowly show, but this is crazy trading and has nothing to do with the company’s fundamentals.”

Time will tell if indeed LongFin’s fundamentals will show… or if instead, Meenvalli follows UBIA’s lead and sells his shares at a tremendous profit.

Get ready for the Crypto Model

Meanwhile, Rowe Wealth Management has pinpointed the strongest companies with direct and indirect exposure to the crypto boom in terms of both relative strength and decreased risk.

The companies we’ve assembled in our Crypto Model have proven track records, plenty of cash, and prices on an upward trend.

The goal of this model is to capitalize on the price surges of cryptocurrencies and blockchain technology — with less volatility and risk than you would expect from micro-cap companies pivoting to blockchain, or even from cryptocurrencies themselves.

Though we haven’t yet “opened the doors” to our Crypto Model portfolio, you can start getting ready for it today.

To find out whether our Crypto Model will be a good fit for your account, reply to this email or use this link to set up a one-on-one consultation. We can assess your risk tolerance, and discuss whether the Crypto Model would be a proper fit for your investing horizon.

This consultation is free to those with investment accounts valued over $500,000, no matter where they are or who manages them for you.

We look forward to talking with you about the investment opportunities most likely to bring you market-beating returns.


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