Interchange

Want a stock price bump? Put ‘blockchain’ in your financial statements

Quick Take

  • Amidst a continual drip of corporate blockchain newsflow, I keep coming back to the question of whether these touted initiatives will ever actually be accretive for shareholders, given the time and cost of initial investment
  • I came across an academic paper which explored whether stock market investors actually value firms investing in blockchain technology (via share appreciation), or if they simply view these stocks as a convenient way to speculate on Bitcoin, blockchain, and other cryptocurrency hoopla
  • The paper found that an initial reaction to the news of investment into blockchain generated almost a 15% BHAR (buy-and-hold abnormal stock return) vs. a benchmark through the event day (1 day prior to 1 day after)
  • The study also found that when firms specifically mention the term “blockchain” in their financial statements, by the end of the initial investment announcement quarter and/or year, they saw an initial reaction 29% higher than other blockchain investing firms, with virtually no sign of reversal in the following three months
For what’s felt like ages we’ve been enmeshed in a persistent drip of media headlines touting investments made by well-established Fortune 500/100 companies in pursuit of an often sought but never quite attained blockchain solution.
 
Even in the deepest depths of the recent bear market, the one constant has been the enterprise-blockchain newsflow updates.