Longfin Corp (NASDAQ: LFIN) is having a rough start to the trading session this morning. However, if you were watching the price action on the stock yesterday, you were likely expecting to see the declines. That’s because the stock climbed by more than 200% to the close, even reaching intra-day highs of around 500%. Today, we’ll talk about why we saw the massive gains in LFIN yesterday, why it’s falling today, what we’re seeing from the stock, and what we’ll be watching for ahead.
What’s Going On With LFIN
As mentioned in previous posts, the massive gains that we saw yesterday are the result of an acquisition in the blockchain space. On Friday, Longfin announced that it has acquired Ziddu.com. This is a blockchain empowered service designed for processing microfinance loans as well as making cross-border transactions more efficient.
The system runs on a proprietary smart contract known as Ziddu Coin. Zidu Coin is then converted into Bitcoin and Ethereum for the financial purposes the system is designed to handle.
With the acquisition of Ziddu.com, LFIN is the next fintech company to plant their roots in the crypto/blockchain industry. As bitcoin, ethereum, litecoin, and others continue to fly in value, companies like LFIN that make these leaps will likely be rewarded, and investors know it. As a result, we tend to see strong gains on these types of announcements.
Why The Stock Is Falling Today
While Longfin Corp saw gains in multiples yesterday, that’s nowhere near what we’re seeing on the stock today. In fact, since the pre-market, the stock has been trading in the red. So, what’s the deal? Well, it’s important to remember that market movement tends to happen through a series of overreactions.
Essentially, investors were overwhelmingly excited yesterday. This caused a frenzy of buyers to hit LFIN, pushing the value of the stock for the top. However, the value clearly went higher than it should have, and we saw a mid-day correction from highs. Today, slight declines seem to be a continuation of that correction, bringing the value of the stock down to a more realistic rate before normalized growth can continue.
What We’re Seeing From LFIN
As mentioned above, Longfin isn’t having the best of days in the market today as the stock continues to correct. Of course, our partners at Trade Ideas were the first to alert us to the declines. At the moment (9:16), LFIN is trading at $68.39 per share after a loss of $3.99 per share (5.51%) thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on LFIN. In particular, we’re interested in following the story surrounding the acquisition of Ziddu.com and excited to see the revenue that is generated as a result. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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