What am I doing about Supply@Me (SYME) shares?

SYME shares have been very volatile over the past few months. But is this stock too risky and expensive or should I buy it today?

| More on:

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.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The Supply@Me Capital (LSE: SYME) share price has been extremely volatile since going public through a reverse takeover. Indeed, over the past year, it has managed to rise from 0.15p to its current price of 0.34p. Nonetheless, it also reached highs of 0.74p last August. Therefore, it’s clear that SYME shares are unpredictable, yet may have have significant upside potential. So, what am I doing about the shares now?

The business model

Supply@Me is a young fintech company, which is attempting to offer a new way of inventory financing. This is where companies take out a short-term loan with a bank so that they can purchase products. As an alternative, Supply@Me is enabling companies to achieve the same result, without the need to take on debt.

Evidently, this has a number of benefits, especially because companies can avoid incurring debt. This has resulted in a growing number of customers, from 82 a year ago, to 187 this year. That said, the company has delayed its full-year 2020 results release, and it is difficult to judge how the new customers have affected the financials of the company.

It does have to be mentioned that the business is still unprofitable though, and is only generating very small revenues. Based on the youth and uniqueness of the company, there is no guarantee that it will be able to generate profits any time soon. As there is no clear path to profitability for the business, I can see this having a negative impact on the SYME share price in the near future.

Future prospects

Due to the limited history of the company, it is very difficult to judge its future prospects. Despite this, I feel that it is moving in the right direction. For example, at the end of May, the firm acquired TradeFlow. This is a Fintech-powered commodities trade enabler focused on SMEs, and it is hoped that this acquisition will increase the value of Supply@Me. Investors certainly felt that this was a positive move, with SYME shares rising more than 6% on the day.

Further, Supply@Me has recently managed to raise £5.6m through convertible loan notes. This money will be used to support the acquisition of TradeFlow and provide more working capital for the business. I believe that this could help the company in its attempt to grow revenues.

On the other hand, I do have many worries about the stock. For example, it was initially sold to investors on a prospectus showing net assets of £227m, yet on its post-listing balance sheet, net assets were less than £1m. This is a very large problem for any public company, as it does not exactly show management competence. It was no surprise that the SYME share price fell heavily after this was revealed. The fact that the 2020 full-year results have been delayed twice has reinforced my fears.

Am I buying SYME shares?

I can see significant amounts of upside potential, and it certainly has an interesting business model. It could well have a bright future. But I’m staying away from SYME shares. A mixture of poor accounting and a lack of a clear route to profitability makes this company too much of a risk for me.

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 assessed. Consider taking independent financial advice.

Stuart Blair has no position in any of the 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.

More on Investing Articles

Investing Articles

Up 670% in 2 years! This former penny share is skyrocketing on SpaceX contracts

Shares of Filtronic (LON:FTC) were soaring to multi-year highs today after another contract win with SpaceX. Should I buy this…

Read more »

Investing Articles

Why is the Greatland Gold (GGP) share price up 10% today?

Our writer looks at the reasons why the Greatland Gold (GGP) share price is the AIM 100’s best performer today.

Read more »

Passive income text with pin graph chart on business table
Investing Articles

What do I need for a passive income of £100k a year?

How much would I need to invest to collect a very healthy yearly passive income on my retirement? Surprisingly, the…

Read more »

US Stock

£2k invested in Nvidia stock 2 years ago is now worth this boggling amount…

Jon Smith details how much unrealised profit an investor would have from buying Nvidia stock but is cautious about what…

Read more »

Investing Articles

2 value stocks that still look cheap despite the FTSE rally!

Harvey Jones picks out two UK value stocks that still look nicely priced even as the UK index climbs. He…

Read more »

Dividend Shares

I asked ChatGPT to build the perfect passive income portfolio and here’s the result

Jon Smith turns to the world of AI to try and find out whether ChatGPT could build an investor a…

Read more »

Investing Articles

£20,000 to invest? Here’s how the FTSE 100 could deliver a £2,040 passive income

Here are two ways that investors with a lump sum to spend could target a large passive income with FTSE…

Read more »

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

Here’s how someone could start investing in 2025 with just £1,000

Planning to start investing in 2025? This writer highlights two very different stocks that might be worth considering for a…

Read more »