After a sustained downturn over the last two years, Xunlei Ltd., a 14-year-old Chinese online service provider, is surprising the market as it has become the best performing stock in the NASDAQ Composite Index since October 12, according to Bloomberg’s data.

The Shenzhen-headquartered company is best known—and once notorious—for its file sharing and downloading services. Back in 2011, Xunlei held up to 78.7% of China’s software download market  (in Chinese), data from iResearch shows. When it realized a business relying on downloads wasn’t sustainable, Xunlei started to pivot in late 2014, repositioning itself as a cloud-based speed acceleration service provider. Its cloud computing business has yet to reach profitability.

And the company is in for another shift. The kicker driving Xunlei’s current stock price, analysts suggest, is its goal to transform itself from a traditional internet service provider into one “exploring emerging blockchain technology,” the company says in its Q3 2017 financial report.

On October 12, Xunlei introduced the “OneCoin” (玩客币) blockchain-based product. Similar to Bitcoin, OneCoin has no central bank-backed value and has attracted speculators. China has recently banned all initial coin offering (ICO) activities, but Xunlei refused the charge that OneCoin is a currency, as it cannot be purchased or traded in cash (in Chinese).

“We believe blockchain technology today is reminiscent of the internet technology in the 80’s when the users of the internet were primarily enterprises,” Xunlei CEO Lei Chen says in a statement. “With millions of DAUs of Xunlei APPs and subscription members, we have the natural advantage of developing blockchain technology and exploring its applications to the mass markets.”

Analysts caution the speculation of the Xunlei stock. “The final leg is the most risky,” Anthony Tong, Toronto-based chairman of Beacon Securities Institute, says. “Investors should take profits and exercise caution.”

Xunlei reported a 15.6% year-over-year sales growth to $47.3 million from Q3. Gross margins, however, plunged to 38.6% due to rising operating expenses. The company ends up with a $25.6 million net loss in the same period. Chinese hardware manufacturing giant Xiaomi is its largest shareholder.

Telling the uncommon China stories through tech. I can be reached at ritacyliao [at] gmail [dot] com.

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