Graphic: Blockchain name-grabbing has echoes of dotcom bubble

HIVE Digital Technologies

08/02/2018 10:14

By Alasdair Pal 
    LONDON, Feb 8 (Reuters) - If you want a quick boost to your 
company's share price, adding "blockchain" to your name will 
work - at least for a while. 
    Despite a slump in cryptocurrencies that has wiped more than 
50 percent off the value of bitcoin since December, the majority 
of companies that have jumped on the blockchain bandwagon - 
often from entirely unrelated industries with little or no 
connected revenue - are still sitting on sizeable gains. 
    The average share price of such companies has risen more 
than threefold since such name changes, according to Reuters 
data, with experts comparing the practice to a similar rush 
during the dotcom bubble.  
    
    Most recently shares in Stapleton Capital  BLOC.L , a UK 
shell company yet to report any revenues, doubled on Jan. 22 
after it changed its name to Blockchain Worldwide.  urn:newsml:reuters.com:*:nFWN1PH03W 
    The rally has come despite regulators across the globe 
taking a closer look at recent company converts to the 
blockchain name. 
    U.S. regulators suspended the shares of UBI Blockchain 
 UBIA.PK  on Jan. 11 after finding evidence of "unexplained" 
market activity, while Israel-based Blockchain Mining  NRH.TA   
is plotting an alternative listing after regulators said they 
planned to ban companies involved in cryptocurrencies in the 
country.  urn:newsml:reuters.com:*:nL8N1PP38D 
    Both stocks had rallied dramatically since changing their 
name - more than 1,000 percent in the case of UBI Blockchain - 
but have since erased almost all their gains. 
    "It reflects that (blockchain is) a big bubble," said Huy 
Nguyen Trieu, an associate fellow in fintech at the Oxford Said 
Business School, on the spate of company rebrands. 
    "During the dot-com boom, France Telecom changed its name to 
France Tele.com, and because of that its share price exploded." 
    Bitcoin's 40 percent slump this year has been driven partly 
by growing expectations of a regulatory crackdown on 
cryptocurrencies. Blockchain is the technology that underpins 
them, but can have many other business applications as a ledger 
for recording transactions. 
    "Crypto is a bubble in the sense that there are a lot of 
people wanting to buy the asset, but blockchain also in terms of 
the huge amounts on investment - a lot of that won't have 
short-term economic returns," said Nguyen Trieu. 
    France Telecom, since rebranded as Orange, wasn't the only 
company to benefit from the market's enthusiasm for all things 
tech at the turn of the century. 
    In December 2001, a study by academics at Purdue University 
found that the 95 companies that added ".com", ".net" or 
"internet" to their names saw their share price increase by 74 
percent in the 10 days surrounding the announcement day. 
    And if the current crypto-crash continues, companies have 
one more name-change trick available. 
    A study by the University of Illinois in 2002 found that 
when many of the same companies changed their names again after 
the bubble burst to remove traces of their dotcom past, their 
shares rallied by a similar amount. 
 
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Blockchain graphic    http://reut.rs/2sfRNz1 
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 (Reporting by Alasdair Pal; Additional reporting by Jemima 
Kelly; Editing by Tom Pfeiffer and Hugh Lawson) 
 ((Alasdair.Pal@thomsonreuters.com; +442075428075; Reuters 
Messaging: alasdair.pal.reuters.com@reuters.net)) 
 
Keywords: BLOCKCHAIN COMPANIES/