Please ensure Javascript is enabled for purposes of website accessibility

Why Xunlei Ltd. Stock Surged Monday

By Daniel Sparks - Dec 11, 2017 at 5:11PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The cloud-computing company behind the Wanke coin mining project appears to be benefiting from the bitcoin craze yet again.

What happened

Shares of cloud-computing company Xunlei (XNET -2.50%) surged as much as 30% Monday, recouping some of the more than 50% decline they had experienced since Thanksgiving. The stock was up 29.4% at the close, meaning it's now down about 39% since Thanksgiving.

The stock's rise on Monday was likely fueled by the recent rise in cryptocurrency prices. Since Xunlei launched its "Wanke coin mining project," which explores emerging blockchain technology, it  has benefited from bitcoin-related hype: Its shares are up more than 300% year to date.

A programmer at a computer programming code next to piles of coins

Image source: Getty Images.

So what

Bitcoin benefited Monday from the first bitcoin futures being traded on Sunday night. Bitcoin has risen a total of about $5,000 in the past week and is up 15-fold year to date.

But if cryptocurrency-driven speculation appears to be associated with Xunlei stock's rise, management has discouraged investors from making these connections. In a Nov. 29 press release, management said:

The Company believes that Wankebi is a kind of digital asset and can be used on the Company's internet properties and should not be traded on other transaction platforms. When developing blockchain technology, the Company utilizes such features as openness, transparence and security for their applications. Wankebi is only a symbol of proof for these applications, rather than a subject of speculation.

Now what

That Xunlei stock's rise is happening in conjunction with cryptocurrency hype should be a red flag for investors, especially since a company executive actively discouraged cryptocurrency-tied speculation in an interview with Bloomberg. Vice President of Marketing Dong Xue said he hopes investors are interested in the company "because of the future of 'shared computing' and their trust in our new management team, rather than for speculation."

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Xunlei Limited Stock Quote
Xunlei Limited
XNET
$1.56 (-2.50%) $0.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
332%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.