Longfin Corp (NASDAQ: LFIN) is having another overwhelmingly strong day in the market today, following yesterday’s massive gains. For those of you who didn’t catch the news, yesterday’s gains in LFIN were the result of 2 things. First and foremost, there as a short sale restriction on the stock, making it so that shorts had no control. On top of that, the CEO of the company said that he wouldn’t sell his shares for 3 years in an interview where he blamed short sellers and filing nuances for the massive declines the stock has seen.
Nonetheless, some investors ate up the news, then, there were likely a slew of messages in trading rooms, leading to the monumental rise in value that is still happening today. However, I urge you to focus on the idea that the traders are playing the greater fool theory. At the end of the day, the stock is simply climbing the Empire State Building’s stairs so that it can take a dive from the top!
LFIN: A Short Seller’s Dream
At the end of the day, Longfin is a blockchain company that seems to be focused on giving investors very little data, only completing minimum filings, and diverting attention when things start to go wrong. When it comes to a company in the stage, we would expect to see extra communication with investors, telling them that things are going well and providing updates on progress with regard to key initiatives. However, that’s not what we’re getting out of LFIN.
The reality is that LFIN is likely one of the many companies that went public on the blockchain rush with a goal of using the public market like a cash machine. If you don’t believe me, think about it… look back at the IPO. Are the CEO and CFO of the private company the same as the CEO and CFO of the company now? When was the change made? Oh, that’s it… the change was made just before the IPO. Hmmm… why might that be?
While the Short Sale Circuit Breaker stopped the shorts yesterday, and the markets are enjoying gains today as the greater fool game continues to be played, shorts are likely to take control of the stock relatively soon yet again, and it’s not because shorts will be shorts. Ultimately, the monumental drop will be the company’s own doing through tactics of minimal communication, attention diversion, and what may turn out to be securities fraud. as recently shared by Citron Research.
— Citron Research (@CitronResearch) March 26, 2018
What We’re Seeing From The Stock
As the greater fool game continues, Longfin is making a dramatic run for the top for the second day in a row. Of course, our partners at Trade Ideas were the first to alert us to the gains. Currently (10:01), LFIN is trading at $28.19 per share after a gain of $9.05 per share or 47.28% 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 blockchain scheme to see just how badly it falls and whether or not an investigation will take place any time soon. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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