Dragni Dragnev

Bitcoin Shop Inc (OTCMKTS:BTCS) Loses Even More Ground

by Dragni Dragnev February 25, 2015

Bitcoin Shop Inc (OTCMKTS:BTCS, BTCS message board) stock prices fell another 13.38% yesterday, as more and more investors withdrew from the company.

As we've mentioned before in our articles covering BTCS, there is nothing surprising or irregular in BTCS's current chart movements. Rather, the ticker's fall seems to be a correction of an irregularity that began on Feb. 12, when the company stock prices started ascending.

Investors must have reasoned that BitCoin prices going up is surely a good thing for BTCS. However, this reasoning is flawed – the price of a cryptocurrency in and of itself has little to no bearing on this specific company's achievements to date and its financial standing. So why did the ticker jump like it did?

The answer to that question is rather easy, and can be summed up in one word – hype. With all the buzz in the media about bitcoin prices rising dramatically, it is no wonder that many investors jumped on the hype train for a company that has “bitcoin” in its name.

However, a trendy name does not guarantee that a company is good. Serious due diligence is necessary to discern whether or not that is the case. And in BTCS's case, due diligence yields some pretty unimpressive financials:

  • Cash - $111 thousand
  • Current assets - $561 thousand
  • Current liabilities - $131 thousand
  • Sales - $1520 (NUMBER NOT IN THOUSANDS)
  • Net loss - $2.9 million

This is why investment decisions should not be done without proper research. If anything, recent experience teaches that the fact that a company has something trendy, such as “marijuana” or “bitcoin” in its name does not necessarily guarantee that it is a great investment.

Still, comparing price charts yields an interesting realization – although BTCS appears to be lacking in many respects, there definitely seems to be some sort of co-relation between its share prices and BitCoin value. Opportunistic investors may try to take advantage of that, if they deem it worth the risk of trading a stock that is influenced by not one but two very different markets, with all the dangers that represents.

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