[email protected] Capital’s share price has soared. Here are 5 things you should know

[email protected] Capital’s share price has surged more than 1,000% over the last month. Tempted to invest in this exciting FinTech stock? Read this first.

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The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

The [email protected] Capital (LSE: SYME) share price has rocketed up this week. Yesterday, it climbed about 40%. The day before, it surged about 75%. Over the last month, it has climbed more than 1,000%.

Naturally, after that kind of share price performance, the stock is getting plenty of attention. Tempted to buy [email protected] Capital shares? Here are five things you should know.

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[email protected] Capital: business description

Let’s start with a bit of information about the business.

[email protected] Capital is an early-stage financial technology (FinTech) company that offers an innovative platform for inventory monetisation. This platform enables businesses to improve their working capital position (generate cash flow) by releasing capital from their inventory.

The way the platform works is that it aligns businesses seeking to monetise part of their inventory for cash with Inventory Funders such as banks and financial institutions. These Inventory Funders invest through the platform into portfolios of inventory assets via Securitisation Special Purpose Vehicles. Much like peer-to-peer lending, it’s a win-win for both parties.

[email protected] Capital generates fee income from the platform.

Source: [email protected] Capital

Growth potential

[email protected] Capital certainly looks to have growth potential.

The company explained in its recent full-year results that whereas Just In Time (JIT) inventory strategies were previously the standard for manufacturing and trading businesses, following Covid-19, many businesses are consciously choosing to build up inventory. This can help them avoid supply chain shortages and subsequent loss of trade.

This is a positive development for [email protected] Capital as businesses will look to monetise the higher volumes of stock being held. The company said in its full-year report that it “anticipates higher levels of demand for its services” as supply chains evolve post-Covid-19.

Meanwhile, the size of the European inventory financing market stands at just under €2trn, according to proactive research. This suggests there could be a huge opportunity here.

Strong progress

Looking at recent updates from [email protected] Capital, the company appears to be making plenty of progress.

At 30 June, the company had 97 client companies in its portfolio and gross originations of €1.43bn. That’s up from 66 client companies and gross originations of €972m at 31 December 2019.

The company also said in a recent trading update that it is working with a large UK financial institution to launch a UK inventory monetisation pilot programme (up to now it has been focused on Europe).

The CEO just bought stock

It’s worth pointing out that CEO Alessandro Zamboni just purchased shares in [email protected] Capital. According to regulatory filings, the insider purchased 1.63bn SYME shares through his company Orchestra Group on 17 August at a price of 0.6756p per share.

This is another positive development. I like the fact that management has ‘skin in the game’. All in all, the story looks very interesting, in my view.

Risks

Before you rush out to buy the stock, however, I’ll point out that there are plenty of risks to the investment case here.

It’s worth remembering that this is an early-stage business. It’s not yet profitable. Going forward, [email protected] Capital’s share price could be highly volatile. This is not a stock for risk-averse investors.

Personally, I’m going to put this stock on my watchlist for now and monitor it from the sidelines. It certainly looks interesting. But it’s a highly speculative play. There are other small caps I like more than [email protected] Capital right now.

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Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Should you invest the value of your investment may rise or fall and your Capital is at Risk. Before investing your individual circumstances should be considered, so you should consider taking independent financial advice.

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