CEA Industries shares surge fivefold after announcing a "transition to the virtual asset business"...followed by a sharp decline
Summary
- CEA Industries reported that after announcing a transition to the virtual asset industry, its share price surged more than fivefold before plummeting again, leading to heightened volatility.
- CEA stated that it will adopt Binance Coin as its main asset, pursue large-scale investments, and has even replaced its management team with virtual asset specialists.
- Experts are reportedly concerned about CEA’s lack of core business experience, citing that stock prices could swing with virtual asset price volatility and questioning the company’s real competitive strength.
Canadian e-cigarette company CEA Industries saw its stock price soar over fivefold in a short period after declaring a transition to the virtual asset (cryptocurrency) sector, only to plummet soon after, increasing overall volatility.
According to the industry on the 2nd, shares of CEA, listed on the NASDAQ in the United States, closed at $57.59 on the 28th of last month (local time), up 548.85% from the previous trading day. At one point during the session, the price surpassed $77, drawing attention as a meme stock in a short span. However, as profit-taking sell-offs accelerated, the closing price on the 31st of last month plummeted 27.02% to end at $42.04.
The surge was triggered after the company announced its transition plan. On the 27th of last month, CEA revealed plans to collaborate with virtual asset investment companies 10X Capital and YZi Labs to raise a total of $500 million and make Binance Coin (BNB) its main asset. This led to a wave of buying from institutional and individual investors, causing the rapid price increase.
In addition to accumulating Binance Coin and establishing asset vaults, CEA plans to expand investments up to $1.25 billion in the future, and pursue various revenue models such as staking and lending of virtual assets. The management team was also completely overhauled, with David Namdar—who has a background in virtual asset investment firms—appointed as the new CEO.
However, there are concerns in the market about such a drastic business shift and the associated stock surge. Originally, CEA was an agriculture company focused on tobacco cultivation and had no prior experience in IT or virtual asset-related businesses. Experts warned: "A price structure that fluctuates with virtual asset volatility without a solid core business base is highly risky."
CNBC reported, "Recently, beginning with Stratiti (formerly MicroStrategy), more companies are seeking to drive up their stock prices by acquiring virtual assets. CEA is an example of joining this trend, but whether it can secure real competitiveness remains uncertain."
Minseung Kang
minriver@bloomingbit.ioBlockchain journalist | Writer of Trade Now & Altcoin Now, must-read content for investors.
