It Was Great When Shares Soared 30-Fold... Corrugated Box Company Rocked by Crypto Investments [Business & Issue]

Stock Soars, Then Plunges More Than Half
No Profitability Plan Beyond Crypto Investments

Logo of Forever8, an inventory management solution company under Eight Holdings' online shopping mall. Eight Holdings homepage

Eightco Holdings, a small-cap company listed on the Nasdaq in the United States, soared by 3,000% in just one day following its announcement of an investment in Worldcoin, only to plunge again, falling more than half from the peak reached on September 8. Although Eightco Holdings has attempted to defend its stock price by announcing plans to acquire not only Worldcoin but also other major cryptocurrencies such as Ethereum, concerns are mounting that the extreme volatility will persist due to the absence of any concrete profitability plan.

Stock Surged 30-Fold, Then Plunged Again... Now Down More Than Half from Peak

Recently, Eightco Holdings has become one of the most closely watched stocks on the Nasdaq. This is because its share price skyrocketed by a staggering 3,008.97% in just one day following the Worldcoin investment announcement. On September 8, Eightco Holdings' stock price jumped sharply from $1.45 to $45.08. However, after this surge, the price began to fall again, dropping to $14.50 by September 11-nearly a 70% decline from its peak.

The main reason for this dramatic volatility was the announcement of the Worldcoin investment. According to CNBC, on September 8, Eightco Holdings declared that it would acquire Worldcoin as a financial asset and succeeded in raising funds by issuing $250 million worth of private shares.

Worldcoin is a blockchain coin used by World, a biometric authentication startup founded in 2019 by OpenAI CEO Sam Altman. The system involves scanning a person's iris data with a device called an Orb to create an ID that proves their humanity, after which users receive coins as rewards for profits generated through artificial intelligence (AI). The popularity of OpenAI and the unique features of Worldcoin combined to make Eightco Holdings' Worldcoin investment a sudden focus of investor attention.

Subsequently, Eightco Holdings invited Dan Ives, a senior analyst at Wedbush Securities and a renowned expert in US tech stocks and AI investment, to serve as chairman of its board of directors. With an AI investment expert joining the board right after the Worldcoin announcement, Eightco Holdings quickly became a trending "meme stock" on social media, attracting a surge of buying interest.

Inventory Management and Corrugated Box Company... Surged on 'Worldcoin' Investment

Worldcoin Homepage

Although Eightco Holdings has suddenly gained attention as a cryptocurrency-focused company, its original business was far removed from the cryptocurrency industry. Eightco Holdings originated from Ferguson Containers, a small corrugated box manufacturer established in 1966, which primarily supplied cardboard boxes for moving and delivery services.

In 2022, Eightco Holdings acquired Forever8, an inventory management solution provider for online shopping malls. This company is a fintech firm that offers entrepreneurship education and fundraising support for individual online mall founders. Last year, Eightco Holdings sold Ferguson Containers and now operates based on the revenue and profits generated by Forever8.

The problem is that Eightco Holdings' financial performance has been steadily deteriorating. Last year, its annual revenue dropped by 41.4% year-on-year to $39.6 million, and it posted an operating loss of $8.19 million, marking its second consecutive year in the red after a $10.68 million loss in 2023. The deficit has continued to grow, with an additional operating loss of $1.2 million recorded in the second quarter of this year.

Plans to Acquire More Ethereum... No Concrete Profitability Strategy

Reuters Yonhap News

While the acquisition of Worldcoin and the shift in business focus have temporarily drawn market attention, Eightco Holdings still lacks a concrete plan for profitability. If the company fails to secure a stable source of income beyond cryptocurrency accumulation, there are concerns that its stock price volatility will continue to resemble a rollercoaster.

According to Investing.com, Eightco Holdings CEO Kevin O'Donnell announced on September 11 that he had purchased $250,000 worth of company shares. The company also secured a $20 million investment from Bitmine, a cryptocurrency investment firm, and stated that it is open to investing in other cryptocurrencies such as Ethereum in the future. These moves are seen as efforts to stabilize the stock price after its continued decline since September 8.

The market remains uneasy about Eightco Holdings' future. This is due to intensifying competition as more companies pivot to cryptocurrency as their main business, as well as the extreme volatility in the value of cryptocurrencies themselves, which could make financial management very challenging.

In a report, securities analysis firm Trefis pointed out, "Many companies are already pursuing cryptocurrency investments in ways similar to MicroStrategy's past Bitcoin accumulation strategy, but Eightco Holdings does not possess any particularly outstanding technology in this field. The current profitability model is fundamentally highly speculative, and the company is likely to face a liquidity crisis if the value of its cryptocurrency holdings fluctuates sharply. A more stable source of revenue is urgently needed."