The9 Soars Again on Blockchain and Cryptocurrency Rumor

The company's stock jumped in early trading after a post appeared on Tencent Finance about a new blockchain and cryptocurrency business.

Peter H. Frank
    Jan 09, 2018 1:39 PM  PT
The9 Soars Again on Blockchain and Cryptocurrency Rumor
author: Peter H. Frank   

Shares in The9 Ltd. (Nasdaq: NCTY), an online game developer and operator in China, jumped more than 31 percent this morning after rumors surfaced it would launch a cryptocurrency on its gaming platform.

The Shanghai-based company, which has struggled in recent years under repeated threat of delisting by Nasdaq, pulled back in the afternoon, however, and closed at 78 cents per share, up nearly 12 percent on the day.

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The jump in shares continued a volatile week in the company's stock. Beginning the year as low as 55 cents per ADS, the company reached a high of $1.38 per share on Jan. 5 before falling again in recent days.

Today's move came after a post appeared on Tencent Finance in China, which said The9 intends to reconstruct its virtual online community and develop a blockchain and cryptocurrency business.

Citing an unnamed source and posted before the New York markets opened, if true, the report of the initiative would follow similar steps taken by other Chinese gaming operations, including NetEase Inc. (Nasdaq: NTES), Linekong Interactive Group Co. Ltd., and Shanghai U9 Game Co. Ltd. Those companies have also indicated intentions to use blockchain technology within their virtual communities.

A move into blockchain technology could signal a continued push by The9 to bolster its flagging business and declining financial condition. The company, whose games include the CrossFire shooting mobile game, Audition mobile, Knight Forever, Q Jiang San Guo and Wildlands God of War, has seen revenue decline significantly over the past year while losses continued to mount.

In its latest earnings report filed at the end of December, the company said revenue fell 32 percent to $2.3 million in the first six months of 2017 compared with a year earlier. The company lost $18.3 million during the same period.

Since then, The9 has undertaken a number of strategic moves to expand its business.

The company announced yesterday it would acquire a 29-percent stake in a Hong Kong-based online and mobile app developer by issuing 3.6 million shares in a private placement. In June, the company announced it agreed to issue 12.5 million shares at a value of $15 million to IE ltd. in exchange for a 14.55 percent stake in its online marketing platform in Korea.

Still, after overcoming one delisting threat by Nasdaq officials earlier this year, The9 received a new warning in late December that the market value of its ADSs had again fallen below minimum requirements.

 


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