On Tuesday, Tesoro Enterprises (OTCMKTS:TSNP) announced its plans to move into blockchain trading markets. With shares already up almost 200%, penny-stock investors will likely see more gains as Wall Street punters rush in.
Don’t assume long-term success — very few penny stocks ever vault themselves into the big leagues, and Tesoro doesn’t exactly have a great resume either. But if you’re looking to nurse your GameStop (NYSE:GME) and AMC (NYSE:AMC) losses, this flash stock has it all:
- A well-timed press release in a market that’s starving for blockchain investments.
- A charismatic CEO who can talk the talk.
- A crypto market that’s too hot to handle.
TSNP Stock: The Blockchain Bonanza
TSNP stock isn’t for the faint-hearted. Just a month ago, Tesoro Enterprises was an unknown penny stock that claimed to focus on the “delivery of construction materials for the commercial and residential market places.” The last time the company reported figures to the SEC was in 2012, showing just $360,000 of revenues and a -50% profit margin.
But then management did something quite brilliant. After merging with HUMBL in December, the company launched a press release last Tuesday, renaming itself HUMBL Financial and claiming to create a way for investors to invest in ETF-styled blockchain technology. Shares shot up from 40 cents to $1.40 by the end of the week. Some might rightly wonder if it’s a pump-and-dump.
Is HUMBL Blockchain for Real?
It’s entirely unclear what a company that delivers construction materials has to do with crypto investing (or why a crypto company would merge with a construction penny stock). But that hasn’t stopped the San Diego-based company from trying. In the press release, the company claimed it would release “non-custodial, algorithmically driven financial technology services that allow customers to purchase and hold digital assets in pre-set allocations through their own exchange accounts.” In plain English, that means the company will help you invest in an ETF-style bucket of cryptocurrencies, but it won’t do it itself. Instead, it will rely on your existing exchange accounts to allocate trades.
Presumably, that’s because the company’s original mission of running an exchange-traded fund was a little too hard. The SEC has rejected the far-better funded Gemini ETF’s proposal twice already, so it’s not surprising that HUMBL has also faced similar roadblocks. An non-custodial app, meanwhile, is far easier to launch.
That’s not to say HUMBL couldn’t eventually develop a “Web 3 platform that will allow you to invest, trade, track and pay in more synthetic ways on the blockchain,” as it claims it will. But that’s likely years away — if it ever happens at all.
Will TSNP Stock Go Up?
That doesn’t mean TSNP stock can’t bounce in the meantime. Investors are starved for good cryptocurrency stocks; Marathon Patent Group (NASDAQ:MARA) has a long history of fraud and misrepresentation. Riot Blockchain’s (NASDAQ:RIOT) CEO, meanwhile, has been investigated by the SEC for microcap fraud.
That makes any legitimate-sounding company with the word “blockchain” have the potential for massive gains. Whether actually legitimate or not, it doesn’t matter much when the market’s this hot. And with enough retail-investor-fueled momentum, this penny stock could raise enough money to become a self-driving force in cryptocurrencies.
Long Island Blockchain? Meet $40,000 Bitcoin.
In 2018, the Long Island Iced Tea Corp, a ready-to-drink tea company, rebranded itself as the Long Blockchain Corp. Shares instantly shot up 200% — proof that investors often jump in first and ask questions later. (The company would later fall back to earth and get de-listed).
Fortunately, HUMBL looks a little better-prepared than its tea-producing predecessor. With an actual team of engineers (supposedly) and $2.5 million of funding (also supposedly), this company might yet pull off America’s first blockchain ETF. (Hopefully the company will update its financials with the SEC in the mean-time).
And if it fails? Well, not all is lost. In a crypto market this hot, it could rebrand itself as a cryptocurrency play and keep watching investors rush in. Just don’t be there if or when the market falls out of Bitcoin.
On the date of publication, Tom Yeung did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Tom Yeung, CFA, is a registered investment advisor on a mission to bring simplicity to the world of investing.