Please ensure Javascript is enabled for purposes of website accessibility

Why 500.com's Shares Popped 45.3% Today

By Travis Hoium - Updated Feb 9, 2021 at 2:59PM

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

Betting on cryptocurrencies is helping this Chinese stock today.

What happened 

Shares of Chinese online sports lottery company 500.com (BTCM -5.35%) jumped as much as 45.3% in trading on Tuesday after the company released fourth-quarter 2020 financial results. Shares kept moving slightly higher all day and were up 43.7% at 2:15 p.m. EST. 

So what

Revenue was up slightly to $1.4 million and net loss for the quarter was $8.6 million. Those are hardly impressive figures for a company valued at $913 million, but that may not be what investors are focused on today. 

Bitcoin coins on mobile device.

Image source: Getty Images.

In the release today, management made clear that it's going all-in on cryptocurrencies. A recent share offering was priced half in Bitcoin, worth approximately $11.5 million, and the company says it will "explore business opportunities in the blockchain and cryptocurrency industries." One move in that direction was the acquisition of 5,900 Bitcoin mining machines for $8.5 million. Cryptocurrencies are hot and that's certainly helping 500.com's stock today.

Now what

It seems there's momentum behind any company that even mentions Bitcoin or cryptocurrencies right now and 500.com is riding that wave. There's just as much, if not more, risk in buying a company like this because of cryptocurrencies than just buying the underlying cryptocurrency itself because there's both currency and operating risk in this stock. That's why this is a pop I would pass on today. 

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

BIT Mining Limited Stock Quote
BIT Mining Limited
BTCM
$1.77 (-5.35%) $0.10
Bitcoin Stock Quote
Bitcoin
BTC
$29,140.42 (-2.21%) $-657.89

*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 service.

Stock Advisor Returns
332%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/27/2022.

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.