Tesoro Enterprises (OTCMKTS:TSNP) saw its stock gain 275% last week after the company announced a new lineup of ETF-styled blockchain investments. The gains for TSNP stock took its valuation as high as $8 billion, prompting InvestorPlace Markets Analyst Tom Yeung to ask “What’s Going on With Blockchain Play Tesoro Enterprises?”
Well, what is going on with Tesoro Enterprises?
Historically, Tesoro Enterprises has been a home-renovation retailer for individual and commercial customers. It sold floor and wall covering materials, operated retail showrooms for tile and also provided a variety of natural stone products. In December 2020, Tesoro walked away from that history, announcing it had completed a merger with HUMBL, LLC. At the time of the merger announcement, the newly combined company said that Tesoro will start trading as HUMBL under the ticker HMBL.
Although that name change has yet to occur, TSNP stock is benefitting from HUMBL. It is the newly public company that is behind the blockchain investment products. And, with an $8 billion valuation (now down to $5.22 billion), Tesoro Enterprises is the second-largest equity trading over the counter. Excluding inactive companies, it comes in just below the Grayscale Bitcoin Trust (OTCMKTS:GBTC).
That is no small feat, and that is why Yeung raised his question. What is going on with Tesoro Enterprises? And what should investors do? On Friday, he cautioned investors to avoid TSNP stock, calling it a flash stock and calling out its complicated company history. InvestorPlace.com readers chaffed at this advice, responding that the article showed a “lack of understanding” of TSNP and HUMBL. Another said the article failed to mention HUMBL’s “most lucrative offering.”
Perhaps those readers have a point. Here is what we are working to understand to better help investors.
How Do TSNP Stock and HUMBL Connect?
Some of the most poignant reader claims come down to the relationship between Tesoro Enterprises and HUMBL. Although the name change is part of this, one reader emphasized:
“TSNP was a reverse merger with HUMBL, where HUMBL took over the previously dead company to go to market. Tesoro Enterprise previous returns as a construction material company [have] absolutely no bearing on the current company (HUMBL).”
While the two companies did announce a merger, it seems that this is a classic reverse takeover. Tesoro Enterprises served as a vehicle for HUMBL, LLC to come public. In the process, Tesoro got to shed its home innovation business, and TSNP stock now reflects the endeavors of HUMBL. Therefore, for us, and for readers, to understand the proposition of TSNP stock, it is important to understand what HUMBL does.
There are currently three branches of the business. The first is HUMBL Pay, where the company’s website appears to get its name. This is a mobile payments solution for consumers, freelancers and merchants, which the company says is “built to support 162 million freelancers” in the United States and the European Union. Interested merchants can currently pre-register for the product, and HUMBL says its payments solutions will be coming to 100 countries including Japan, Australia, Canada and the U.S. And while its consumer app is not currently available on the App Store, HUMBL says its product roadmap includes peer-to-peer payments solutions and a “HUMBL HUBS.”
The second part of the business is HUMBL Marketplace, which one reader identified as the “most lucrative.” This vertical includes its own branded merchandise like t-shirts and face masks, as well as products from small businesses. One vendor on the site is “and the moon will rise,” a brand from Karen Kennedy that offers art prints and note cards.
HUMBL’s Third Business Vertical: Blockchain
To really answer Yeung’s question, it is important to consider HUMBL’s third product line, which it calls HUMBL Financial. This product line houses the ETF-styled investment vehicles, which HUMBL calls its BLOCK Exchange Traded Index (ETXs) lineup. And according to the Feb. 2 release, these ETXs give investors “one-click” access to services related to digital assets. At the surface level, this appears to be a savvy way to leverage the current popularity of cryptocurrencies.
As HUMBL advertised last week, these ETXs allow “customers to purchase and hold digital assets in pre-set allocations through their own exchange accounts.” As Yeung translated, this means that the company will help one invest in a bucket of cryptocurrencies. However, investors will have to use their existing exchange accounts to conduct the trades, and HUMBL will not function as a broker-dealer.
That may come. For now, though, CEO Brian Foote says the BLOCK ETXs are a first step. These products include the BLOCK 3, BLOCK 5, BLOCK 10, BLOCK Government, BLOCK Platform, Block Global Enterprise, BLOCK RSI Fractals, BLOCK MACD & VI and BLOCK Oscillators. To determine the exact bucket of cryptocurrencies, HUMBL says these products will track index, active and thematic strategies. And perhaps most enticingly, Foote says the long-term plan is to develop a Web 3 platform. This would allow customers to invest, trade and pay on the blockchain.
As Yeung highlighted, Foote has tried this before. In April 2019, his BLOCK 30 unveiled a similar lineup of ETXs. The company planned to offer this product through Coinbook. Yeung framed this as a reason for caution — Foote is familiar with the high barriers to entry here, ultimately walking away from the plans with Coinbook. However, one reader suggested:
“The ETX failed to launch in the US due to US government regulations, not because it ‘was a little too hard.’ This is why they have already launched in approved international countries.”
Maybe this is a comeback story then for Foote and HUMBL Financial. The company says its products are available in 100 countries. As that reader highlighted, due to regulatory issues, the ETX lineup is not currently available in the U.S. and a handful of other countries.
The Bottom Line on TSNP Stock
So where do we go from here?
For many of our readers, it is clear that Tesoro Enterprises, through HUMBL, is an appealing investment prospect. It touches on hot sectors like blockchain, e-commerce and fintech. However, without any recent U.S. Securities and Exchange Commission filings, it is unclear how meaningful these businesses are to HUMBL. We do not at this point have a clear look at its company finances, nor the path ahead. And, as Yeung highlighted, others have walked this road before. Tyler and Cameron Winklevoss have repeatedly attempted to launch their own cryptocurrency ETF, only to face SEC rejection.
We will continue to research HUMBL to answer your questions, and to help guide your investment choices. For now, continue to do your own due diligence and make sure you know exactly what you are getting into with TSNP stock.
At the time of this writing, HUMBL has not made any officials available to InvestorPlace for comment.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.