Longfin Corp (NASDAQ:LFIN) stock skyrocketed by about 2,500% in two days after the company announced that it’s acquiring Ziddu. That acquisition makes Longfin the newest addition to a growing list of stocks that offer exposure to cryptocurrency and the blockchain.
Longfin IPOs at around $5… last week
Longfin only just went public this month after holding its initial public offering for around $5 per share. When news of the Ziddu acquisition hit on Friday, the fintech company’s stock surged above $20 per share, and then on Monday, it skyrocketed yet again, rising above $125 per share and tripping multiple circuit breakers in the process. Trading was halted at least five times on Monday for a “limit up pause” at the Nasdaq.
Longfin was the first fintech company to hold its IPO through Reg A+ on the Nasdaq. Regulation A+ of the JOBS Act allows for mini-IPOs so small businesses can raise up to $50 million. The fees for mini-IPOs are lower than they are for traditional IPOs, and the disclosure requirements are not as stringent.
The ACAP Strategic Fund's managers see a "significant scarcity of attractive asset allocation choices globally," but also a strong environment for fundamental stock picking. Q2 2021 hedge fund letters, conferences and more According to a copy of the fund's second-quarter investor update, which ValueWalk has been able to review, its managers currently hold a balanced Read More
With the fintech firm’s two-day gains, its shares are now worth approximately $7 billion, according to Bloomberg. Its market cap was only about $280 million when it debuted on the Nasdaq last week.
Crypto bulls dig in
The bitcoin market is now worth more than $300 billion, and the cryptocurrency craze continues with Longfin joining the list of small firms whose valuations have skyrocketed on an announcement that they were getting into cryptocurrency. Longfin entered the digital currency market with its acquisition of Ziddu, which describes itself as “a blockchain-empowered global micro-lending solutions provider” which conducts all of its transactions in cryptocurrencies.
The firm utilizes “Ziddu Coins” for “microfinance lending against collateralized warehouse receipts.” These Ziddu Coins are “loosely pegged to Ethereum and Bitcoin,” Longfin said in a press release announcing the acquisition. The coins are converted into one of the two cryptocurrencies by the importers or exporters and then use the proceeds as working capital. When the contract ends, the importers and exporters repay in cryptocurrencies, with interest rates varying from 12% to 48%.
What makes the company seem even more attractive is its position within fintech. According to its website, It provides finance and FX hedging solutions to importers, exporters, and small- to medium-sized enterprises around the globe, using artificial intelligence and machine learning.