Eightco Holdings (NASDAQ: ORBS), a lesser-known e-commerce firm, witnessed its stock price soar by over 3,000% in just one trading session last Monday. This surge came after the company revealed plans to establish a treasury focused on Worldcoin, a digital currency supported by OpenAI’s Sam Altman. However, the excitement was short-lived. After reaching a peak of nearly $45, the stock has surrendered about two-thirds of its gains and currently trades at approximately $12 per share. So, what is really going on with Eightco stock?
The surge last week was initiated after Eightco announced it had secured $20 million in funding from crypto miner BitMine, while also revealing a private placement of 171.2 million shares priced at $1.46 each. Concurrently, Worldcoin itself rose more than 40% to a market value of approximately $3 billion, according to CoinMarketCap, as traders speculated that Eightco’s acquisition could significantly enhance demand. The company also suggested that Ether might be included as a secondary reserve asset, thereby broadening its investment beyond Worldcoin. The offering, spearheaded by Mozayyx with backing from the World Foundation, is intended for directly acquiring Worldcoin tokens. This announcement sparked immense speculative interest in OCTO stock, leading to a dramatic increase in trading volumes. However, the momentum quickly shifted. After spiking to almost $45, shares plummeted as profit-taking ensued and total trading volumes dwindled. This swift reversal highlights how rapidly speculative investments can dissipate in a market driven more by hype than by underlying fundamentals.
Skepticism Is Warranted
This skepticism is justified. Strategies involving crypto treasuries are inherently risky. In recent years, several publicly traded companies outside the digital asset space have increasingly tested the waters by allocating corporate cash reserves into cryptocurrencies. The rationale is straightforward. Rising token values and relaxed regulatory conditions during the Trump Administration could enhance their financial standings. This approach also allows these firms to attract a more tech-savvy investment base.
The prototype for this approach is MicroStrategy – recently rebranded as Strategy – which began accumulating Bitcoin in 2020. That gamble has transformed the company into a leveraged stake in digital assets, with holdings now valued at tens of billions of dollars. Strategy’s stock has traded at a premium compared to its underlying Bitcoin holdings, as markets assume it can tap into debt markets to purchase even more. However, although Strategy’s strategy has inspired imitators, the risks remain substantial.
Cryptocurrencies are notoriously unpredictable, with token prices capable of fluctuating significantly over short durations. If prices crash, companies with excessive exposure could find themselves in liquidity crises. Just as crucially, such investments often do little to strengthen the core business operations of these firms. Even after last week’s substantial rise and subsequent correction, Eightco continues to be a small player with a market cap below $50 million, firmly placing it in the microcap category.
While Eightco appears highly speculative, the Trefis High Quality (HQ) Portfolio, which consists of 30 stocks, has a proven track record of consistently outperforming its benchmark that includes all three – S&P 500, Russell, and S&P midcap. Why is this the case? Collectively, HQ Portfolio stocks have delivered superior returns with reduced risk compared to the benchmark index; a less volatile experience, as reflected in HQ Portfolio performance metrics.