If you are a fan of football, you know the following scenario well. Down 5 points with just seconds remaining, the losing team sends all of their players down the field into the end zone and tosses a hail mary in hopes of a miracle. Sometimes this prayer pays off. Most times it doesn’t. This is exactly how you should be looking at Long Island Iced Tea stock or should I say Long Blockchain Corp.
In this post, we are going to look at Long Island Iced Tea (NASDAQ: LBCC) stock and why you should be running for the hills and never invest in this sorry example of a stock.
Who Is Long Island Iced Tea
Long Island Iced Tea is a beverage company out of Farmingdale, New York that sells iced tea and lemonade under the name Long Island. While the traditional long island iced tea drink is an alcoholic drink, the beverages that this company sells are all non-alcoholic.
The company started in 2011 but quickly realized how fierce the competition was in the beverage industry. In their most recent earnings report, earnings per share came in at -$0.42 on revenues of $1.6 million. They also have just under $500,000 cash on hand.
After struggling along for 6 years to grow the company, in December 2017, they had a major announcement.
The announcement was they were shifting focus to cryptocurriences and in particular, blockchain. As a result of this announcement, the stock price skyrocketed up over 400% in one trading day. The company says it still plans on brewing its iced tea and lemonade beverages, but that it will also shift more focus to blockchain.
The company is also changing its name to Long Blockchain Corp.
Why This Is A Desperate Attempt
If you remember back to the dot com bubble at the turn of the century, any stock that was minutely related to the internet saw their stock price jump. This led to many companies to simply add “.com” to the end of their names or add “e” in front. For example, Long Island Iced Tea would be e-Long Island Iced Tea.
What happened wasn’t a shock. The bubble burst and down in flames went many of the companies. Only the strongest survived.
Fast forward to today, and we are seeing many companies include “blockchain” in their business names now, hoping to get the surge from being related to the cryptocurrecy craze. This is not going to end well for many of the companies, included Long Blockchain.
The reason is simple, they have zero business knowledge of this space. They are just doing this in hopes of keeping their business afloat. For example, right before they changed their name, they were about to get delisted from the Nasdaq.
When they released the press announcement telling the world their plans, they even admitted they had no current ties to the cryptocurrency scene, and were only in preliminary talks with software developers.
They also announced they were going to raise $8.4 million by issuing new shares of stock to help pay for the equipment they needed to buy. They have since announced they are not going to issue new shares.
In a nutshell, Long Island Iced Tea is a beverage company that isn’t doing a very good job selling their signature drinks and is in threat to go out of business. As a desperate attempt to keep itself alive, they are trying the old bait-and-switch routine to try to fool investors into thinking they are something they are not.
Remember what I said above about the dot com bubble. At the end of the day when the dust settled, only the strongest players survived. Long Island Iced Tea is not one of these players. They have zero experience in the cryptocurrency space and as a result, this attempt to stay relevant is akin to a hail mary in football.
Don’t fall for this trick. Stay far, far away from this stock.
This author has no positions in any stock mentioned and does not plan to open any positions in any stocks mentioned for at least 72 hours after publication of this article.