RC365 Holding (LSE: RCGH) shares floated on the London Stock Exchange in March last year, almost 16 months ago. Since then, we’ve witnessed a truly staggering run-up in the share price. In fact, it’s a multibagger.
So, if I’d invested £5,000 in this stock when it went public, how much would I have right now? Let’s take a look.
Huge gains
The stock chart above tells me that RC365 shares debuted on the public market at around 7p each. Today, they are trading for 148p. That’s a massive 2,014% increase!
It means that a £5k investment made just under 16 months ago would be worth approximately £106,500 today. That’s obviously a jaw-dropping return in such a short space of time.
However, the company’s shares only really took off in June this year. Since then, they have gone truly stratospheric, rising 562% in just six weeks.
What’s caused this dramatic rise? Well, there seem a couple of likely catalysts.
What is RC365?
To recap, Hong Kong-based RC365 provides fintech solutions through its subsidiary, Regal Crown Technology Limited. It focuses on payment gateway solutions and IT support across Hong Kong and China.
Though the company does most of its business in Asia today, it intends to expand internationally, including in the UK.
Somewhat randomly, I’d say, it also operates an online platform that allows maids to find employment online. And last week it acquired a Hong Kong-based media and advertising business called Mr Meal Productions.
Is RC365 doing too many things across multiple geographies too quickly? Only time will tell, I suppose.
AI attention
In June, the firm also announced a non-binding agreement with Hatcher Group, a Hong Kong-listed company. The plan is for the two firms to collaborate on artificial intelligence (AI) solutions in the digital wealth management space.
Due to the market excitement around all things AI, this news was taken very positively by investors.
I should also highlight a promotional article that was recently circulating online. In this piece, the author(s) likened the potential returns of investing in RC365 shares to those of AI chip maker Nvidia.
It seems that the interest this generated, coupled with the fact that this was a penny stock, explains much of the share price rise. Penny stocks have low liquidity and lots of buying activity can quickly send the share price soaring.
Would I buy the shares?
Now, the firm is undoubtedly operating in a very large Asian fintech market. So there is the potential for huge growth and therefore further share price appreciation.
However, in its most recent interim report, the loss-making firm’s revenue came in at less than £1m. That puts the shares on a price-to-sales (P/S) ratio of 144. For context, a P/S of 10 is generally considered very expensive.
Speaking as a long-term investor, a red flag for me here is the news section of the company’s investor relations page. Nearly every piece of corporate news is accompanied with links to articles about how much the RC365 share price has “rallied” or “rocketed“.
I’ve found that companies that focus on short-term share price movements don’t tend to make great long-term investments.
Putting all this together then, I think there are far better investing opportunities out there for my money right now.
