Why Xunlei Ltd. Stock Tumbled Today

MarketsMotley Fool

What happened

Shares of Chinese internet company Xunlei Ltd. (NASDAQ: XNET) continued to crumble on Tuesday. The stock had gained about 475% since Oct. 12, when the company announced a cryptocurrency project. Those gains have been unraveling as the euphoria fades. The stock was down about 15.4% at market close on Tuesday.

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So what

Xunlei announced its "Wanke coin mining" project on Oct. 12. The stock rocketed higher on pure speculation. That rally ended in late November.

On Nov. 29 Xunlei issued a statement regarding its cryptocurrency project in an attempt to quell reckless speculation:

Since peaking on Nov. 24, shares of Xunlei are down about 45%.

Now what

Shares of Xunlei are still up more than 200% since the beginning of October, prior to the cryptocurrency announcement. That gain was driven by wild speculation. Cryptocurrency mania may keep the stock afloat for a while, but those speculating on Xunlei shares should be prepared for more declines.

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Timothy Green has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.