Why Xunlei Limited Stock Gained 29% in April

MarketsMotley Fool

What happened

Shares of Xunlei Limited (NASDAQ: XNET) rose 29% in April, according to data provided by S&P Global Market Intelligence.

Continue Reading Below

XNET data by YCharts

The China-based cloud services and blockchain company made a couple of announcements that were welcomed by shareholders. Xunlei Limited is a small-cap company valued at roughly $900 million and operates in the blockchain space -- two characteristics that predispose the stock to big swings.

So what

Xunlei announced on April 4 that its cloud computing subsidiary had received a National Content Delivery Network operating license from the Chinese government. This gives the company the needed permissions to commercially operate its Nebula content delivery network -- which makes use of redundant computing power on the network to provide cloud computing resources.

April 20 saw the company publish a press release touting the launch of its improved blockchain infrastructure, the ThunderChain. Xunlei says that the ThunderChain platform will allow users to carry out a high number of transactions across different blockchains simultaneously.

Now what

Xunlei is seeing rapid growth for its cloud and blockchain services, but there are some questions hanging over the business. Xunlei is facing a series of class action lawsuits from shareholders alleging that the company misled investors by disguising the initial coin offering for its Linktoken cryptocurrency.

Xunlei argues that it did not actually conduct an ICO because it did not offer coins for sale and instead distributed them in exchange for using the processing power of computers that joined its network. The company says that its Linktoken cryptocurrency is technically not designed to be traded, but circulation of the token has played a substantial role in the company's stock gains over the last year.

10 stocks we like better than XunleiWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Xunlei wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of May 8, 2018

Keith Noonan has no position in any of the stocks or cryptocurrencies mentioned. The Motley Fool has no position in any of the stocks or cryptocurrencies mentioned. The Motley Fool has a disclosure policy.