What happened

Shares of Ebang International Holdings (EBON 5.37%) were up 15.2% in March according to data provided by S&P Global Market Intelligence. The stock was actually up more than 70% at one point, as investors celebrated the launch of the company's cryptocurrency exchange. But the excitement was short-lived and the stock started to fall. It has continued falling in April.

So what

On March 11, Ebang International announced the launch of its cryptocurrency exchange. Think of it like a brokerage account for cryptocurrencies instead of stocks. The platform was offered as a beta test on March 15 to select invitees. However, this test progressed quickly. The formal launch of the exchange came just three weeks later on April 5.

A businessman draws an upward arrow on a line graph.

Image source: Getty Images.

Here's why investors celebrated this move so much from Ebang International: The company hardly generates any revenue with its existing business. Through the first six months of 2020 (which is the most recent financial data available, by the way), it generated a meager $11 million in revenue. Therefore, virtually any new business idea can meaningfully move the needle for Ebang.

Moreover, many investors are bullish on the idea of cryptocurrency exchanges in general, given surging interest for cryptocurrencies and the potential for high profit margins for exchange operators. Therefore, this could be a particularly good business idea for Ebang International.

Now what

Ebang International stock is already down more than 30% since the start of April. The company started the month off by announcing a stock offering that dilutes shareholder value. Later a prominent short-seller, Hindenburg Research, made the stock fall when it published a negative report about the company.

Ebang International currently has a market capitalization of around $950 million, according to Yahoo! Finance. I think investors are still giving this stock a pricey valuation even after the sharp pullback. If the cryptocurrency exchange pans out long-term, then it may be worth it in the end. However, if the exchange struggles to grow, then it's fair to wonder what other options the company can pursue to create shareholder value.