2 Sinking Blockchain Stocks

Citron said LFIN is a "pure stock scheme"

Mar 27, 2018 at 9:37 AM
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Shares of Longfin Corp (NASDAQ:LFIN) are trading down 22.5% at $45.95 -- extending Monday's 16.6% decline. Sparking the sell-off in the blockchain name is a scathing Citron Research tweet -- which also weighed in on Shopify (SHOP) yesterday -- calling LFIN a "pure stock scheme," and saying its filings and press releases are "riddled with inaccuracies and fraud." Separately, FTSE Russell said the shares will be removed from Russell indexes after tomorrow's close.

LFIN stock has now erased its year-to-date lead, and while the security will remain on the short-sale restricted list in today's trading, bearish bettors are likely cheering. Short interest is up 89.5% in the last two reporting periods to 590,000 shares -- a record high on the stock that began trading publicly last December.

It's set to be a down day for fellow blockchain stock Overstock.com Inc (NASDAQ:OSTK), as well, with the shares off 9.4% in early trading at $40.40. The online retailer and digital currency specialist announced a public stock offering of 4 million shares, though it did not disclose the pricing.

Since topping out at a record high of $89.80 on Jan. 8, OSTK stock has shed roughly 55%. Plus, the shares are now trading below their 200-day moving average, which caught an earnings-induced bear gap earlier this month.

Against this backdrop, bearish options prices have exploded. The equity's 30-day implied volatility skew closed last night at 20.2% -- in the 96th annual percentile -- meaning calls are pricing in lower volatility expectations than their put counterparts.

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