CMC News

Mogu Shares Jump 76% on $20M Crypto Purchase Plan

China-based fashion retailer Mogu saw its Nasdaq-listed shares surge 76% to $4.40 after announcing a $20 million cryptocurrency investment strategy. The stock briefly touched above $7 per share before settling at current levels.

Mogu's board approved purchasing $BTC, $ETH, and $SOL as part of its treasury diversification plan. The company believes integrating digital assets will enhance both treasury holdings and operational capabilities for next-generation AI products.

The announcement follows a pattern established by Strategy, formerly MicroStrategy, which shifted from software to #Bitcoin accumulation in 2020. Strategy now holds 638,460 $BTC worth over $73 billion, making it the largest corporate #Bitcoin holder.

Multiple Nasdaq firms have adopted similar crypto treasury strategies, often achieving significant short-term stock price gains. However, recent market dynamics show signs of "investor fatigue" according to JP Morgan analysts.

Strategy's exclusion from the S&P 500 index last week signals potential challenges for crypto treasury companies. The S&P Dow Jones Indices cited concerns about the business model's sustainability and market concentration.

Mogu went public in 2018 with backing from Chinese tech giant Tencent Holdings. The company's shares have remained largely below $5 since reaching an all-time high above $37 in early 2021.

The fashion retailer's pivot to #cryptocurrency reflects broader corporate interest in digital asset diversification. $BTC and $ETH represent the two largest cryptocurrencies, while $SOL serves as a competing smart contract platform.

JP Morgan's Wednesday note highlighted "overcrowdedness" in the crypto treasury space, suggesting share prices may face continued pressure. The bank expressed caution about the sustainability of such business model transitions.