The share price of ChinaNet Online Holdings Corp (NASDAQ:CNET) has for the past year been trading in a reasonably stable manner at below $2. Furthermore, the volatility associated with the share has also been quite limited over this period.
However, in a shocking turn of events, there was a surge in the share price over the last few days with the price rising to highs of up to $11.9. Furthermore, the number of shares traded also rose to nearly 80 million, a first for the rarely traded share.
This can be seen in the chart below:
As such, we took time to assess the driver of this share price and eventually came up with this piece.
CNET: Our History
Let us first have a brief overview of the company.
ChinaNet Online Holdings Inc was incorporated in the state of Texas on April 20 and redomiciled to become a Nevada corporation in October 2006.On June 26, 2009, the Company consummated a share exchange transaction with ChinaNet Online Media Group Limited. The Chinese company became a wholly owned subsidiary of ChinaNet Online Holdings.
ChinaNet Online Holdings is a parent company of ChinaNet Online Media Group Ltd. ChinaNet Online Holdings Inc is a holding company that conducts its primary businesses through its subsidiaries.
The company is an integrated Internet technology institution that provides online to sales channel expansion, precision marketing, and related data services for SME’s and entrepreneurial management and networking services. Its segments include Internet advertising and TV advertising. The company provides services ranging from preparing and publishing media enabled advertising and marketing campaigns for clients on the internet, mobile phone, television and other communication channels, hosting minister with online messaging and consulting functionalities, providing search engine marketing services, data services and providing social networking and information sharing services to entrepreneurs.
In the latest development yet, ChinaNet Online Holdings announced in early January this year to have partnered with Jingtum Technology. Jingtum Network Technology is a credible blockchain ecology builder and hence the former wishes to expand into the blockchain industry and its related technology. Both companies are expected to partner and develop blockchain applications.
Jingtum Technology aims to develop a new generation of value-based Internet technologies in China helping to upgrade from an information-based network to a value-based exchange network. This will see it establish credible ecology and promote preparation as Chinese enterprises enter a new era of digital assets. The system is decentralized and ecologically interactive Internet trading network based on blockchain technology. This system addresses data trust issues through cryptography and distributed coherency mechanisms while maintaining rich transactional and contractual features.
The partnership between the two companies is aimed at using blockchain technology to build a credible, fair, and transparent platform for business opportunities and transactions. The companies are in agreement that blockchain technology enjoys a huge demand in applications for small and medium-sized enterprises including product traceability, product certification, disintermediation, customer identification and brand communication.
The most important aspect is that the enterprise brand and reputation can be converted into digital form and enter the global digital asset trading market for transactions and circulation. This will revolutionize the SME market space as they can build a new business ecosystem based on algorithmic trust by applying blockchain techno in business development.
Mr Handong the CEO of ChinaNet Online stated that “…following introduction of blockchain technology platform centric services which they were offering in the past will gradually shift towards decentralization. This will solve trust issues in business cooperation and services and enhance user vitality and stickiness.”
ChinaNet is likely to shift from information services to transaction services for business opportunities to create a multi-industry cross-chain value-based Internet sharing entity. The partnership will help ChinaNet to integrate blockchain technology into Cloud artificial intelligence and simultaneously form the public chain of marketing and advertising for SME’s. Eventually, it is expected that other areas of business such as business transaction payments, education, and training to create a healthy and sustainable business ecosystem and entrepreneurial environment.
The CEO of Jingtum Technology on his part felt that applying blockchain technology tailored explicitly for SME’s will create a new world of valuable business opportunities. Jingtum was founded in 2014 in China and has operated the blockchain technology as a pioneer company. It is the only company that has run a pilot program on blockchain technology on large-scale applications with the local government on digital assets.
The company’s share prices went on an upward trajectory following the announcement up by over 160%. The partnership between the two companies is giving shareholders a fair degree of optimizing for a bright future and good returns on their investment.
The company’s financial results for its 3rd quarter as reported in mid-November 2017 showed that it’s on an upward trajectory. Revenues grew by 13.6% to $13.5 million up from the previous $11.9 million.
The recent uptake of data services through its search engine 28 3.0 saw a 49.9% jump to $11.9 million in the third quarter.
However, the company has an uphill task in trying to close its reported losses to give it the much-needed investor confidence. The operating loss for the third quarter stood at $3.5 million in the first nine months of 2017 compared to the previous years’ loss of $3.8 million.
The company will continue focusing on integrating and upgrading its Internet advertising and data service to SME clients and investing in developing new service modules for clients. It is believed that the launch of new services in future will help to increase market penetration and boost revenues.
CNET is already in the next phase of their operations as a result of the adoption of the blockchain. Through this platform, the company will not only revolutionize their operations but also the operations of the industry at large. We are hopeful that they will implement the promises they have made to the market, therefore, remain bullish about the stock.
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Disclosure: We have no position in CNET and have not been compensated for this article.