The [email protected] Capital share price has risen by 1,000%! Should you buy shares today?

With the [email protected] Capital share price on a rampage, is now a good time for investors to buy shares in ths up-and-coming company?

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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.

CORRECTION: The original version of this article incorrectly stated that the company’s share price rocketed “from 6p to 80p”. This has been amended to “0.06p to 0.8p”.

Independent fintech company [email protected] Capital (LSE: SYME) has caught the eye of many investors recently. In just over a week, the company’s share price rocketed 1,233%, from 0.06p to 0.8p.

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Such monumental share price gains in a relatively short space of time are rare. That said, when dealing with penny stocks, anything can happen. So, with the [email protected] Capital share price on the rise again, should investors buy shares today in order to make a tidy profit? Well, I think there are a few things you should know first.

What is [email protected] Capital?

According to the company’s website, [email protected] Capital is an “independent fintech company providing an innovative proprietary inventory monetisation service to companies in a wide range of industrial sectors”. As my colleague Edward said in a previous article, “this platform enables businesses to improve their working capital position (generate cash flow) by releasing capital from their inventory”. Essentially, [email protected] Capital functions by matching the working capital needs of clients with capital invested by inventory funders.

In my view, the business model looks sustainable and I can certainly see the company prospering in the long term. However, there are certainly risks involved. Not to mention the difficulties caused by Covid-19. That said, the group only expects the pandemic to cause a three-to-four-month delay to the business plan.

A surging yet unstable share price

After plunging 23% earlier in the previous week, the [email protected] Capital share price rose by 21% in early trading yesterday. Such volatility is a regular theme for those familiar with penny stock investing. For example, when the company’s shares were trading at 5p, a 1p increase to 6p was a 20% gain.

On top of this, would-be investors would do well to keep an eye on the sell/buy spread. This is usually quite wide with penny stocks, often requiring a substantial gain in order to simply break even.

What does the future hold

Ultimately, as an early stage fintech company yet to become profitable, investing in [email protected] Capital is evidently a risky move. That said, if you’re intent on buying, I’d recommend first doing some further research before being prepared to hold for the long term.

It’s encouraging to see to a significant amount of director dealing coming from within the business. This indicates that those on the inside are confident regarding the firm’s long-term outlook. Just last week, the company’s chief executive, Alessandro Zamboni, bought £11m worth of shares valued at 68p each.

It will also be interesting to read over the company’s annual report, which is due to be published in September. By then, we could potentially have a better indication of how to value the company’s stock.

However, I’m not yet fully convinced. Also, I don’t feel as if I know the business well enough to make an investment. Therefore, I’ll certainly be adding [email protected] Capital to my watchlist, but I’d rather remain on the side-lines for the time being.

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