Why Shares of Seven Stars Cloud Group Are Soaring Today

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What happened

Shares of Seven Stars Cloud Group (NASDAQ: SSC), which focuses on supply chain and digital finance solutions powered by artificial intelligence, jumped on Monday. There was no company-specific news, but with Seven Stars having announced a blockchain-based initiative earlier this year, it's safe to say that the surge in cryptocurrency prices is the main driver behind this gain. The stock was up 23% at noon EST, although it was down just two hours earlier.

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So what

Seven Stars stock has risen about 240% since Sept. 1. The company announced on Sept. 28 plans to launch an asset-backed securitization, tokenization, and exchange platform by the end of the year, claiming that it will be the first such platform to be powered by artificial intelligence and blockchain.

This buzzword soup has pushed up shares of Seven Stars against the backdrop of rising cryptocurrency prices. Bitcoin has risen from a few thousand dollars to nearly $20,000 over the past three months, and other cryptocurrencies have surged in price as well. Seven Stars is far from the only stock to surge due to the cryptocurrency boom. E-commerce company Overstock.com is one other example, up about 200% since Sept. 1.

Now what

Seven Stars' market capitalization now sits at around $300 million. The company generated $107 million of revenue over the past 12 months, with a gross margin of just 3.9% and a net loss of $25 million. The stock's surge is being driven by speculation, not the fundamentals.

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