What happened
Shares of Ebang International Holdings (EBON 3.88%) skyrocketed on Friday after the company set the launch date for its new cryptocurrency exchange. The move had been previously announced, but investors are excited to see an official timetable. As of 11:30 a.m. EST today, Ebang International was up an impressive 42%.
So what
Think of a cryptocurrency exchange like a brokerage account for cryptocurrencies instead of stocks. As cryptocurrencies have surged in popularity, so too have profits for these exchanges and investors' interest in the space. For example, Coinbase's upcoming direct-listing initial public offering (IPO) is creating some buzz. Although Ebang International only generated revenue by selling equipment for mining Bitcoin and by providing related services, it wants to grab a piece of this lucrative cryptocurrency-exchange market.
Image source: Getty Images.
Ebang International's exchange will launch in beta form on March 15. At launch, it will only be available to people invited to try it out. Apparently, the company anticipates few problems because it plans to do a full launch by the end of this month. Perhaps the speed with which it's getting this platform out there is why investors are extra excited today.
Now what
In Ebang International's press release, it says, "There is no guarantee that the Company's operation of its cryptocurrency exchange will commence as planned or at all, or that such business operation will improve the Company's financial performance or results of operations." While this language sounds standard for a forward-looking press release, it's a good reminder: Ebang's crypto exchange could still be a ways off from meaningfully improving the company's financials.
In the first half of 2020, Ebang International only generated $11 million in revenue. Considering its market capitalization is over $1.8 billion as of this writing, investors are clearly placing outsize expectations on the company's ability to successfully launch and monetize new products like its cryptocurrency exchange.
