The RC365 (LSE: RCGH) share price has climbed 50% since its dip in August.
At just a few pennies for much of the year, the shares went through the roof in July. When the price reached a 180p peak, it had soared by 700% in little more than a month.
Back at 54p, at the time of writing, could we be set for another surge? And never mind 100p, could RC365 shares smash through 200p?
Some numbers
To try to decide, we could look at profits. Except there aren’t any right now, as the company posted a loss for 2022-23. Revenue did double, but to only about £1.7m. That’s a price-to-sales (P/S) ratio of 49. Eek!
I can’t find any forecasts right now. Analysts aren’t always right, but they do help, and I use their opinions quite a lot. But, there are no forward ratios (like price-to-earnings, P/E), which is a pain.
Still, the RC365 stock valuation has to be based on potential future earnings, that much seems clear.
And if we can’t quantify it, can we go by general growth feelings?
The AI boost
RC365 is being compared to US chip giant Nvidia, and it’s all down to artificial intelligence (AI).
Nvidia stock has more than trebled in the past 12 months. But only a short time ago, the potential benefits of AI were largely unquantifiable. Just as they are with RC365 right now.
But there’s a big difference. Nvidia had concrete plans and we knew the direction the company was going. It did, after all, have a long and profitable history behind it.
It’s also a global tech giant with its technology in millions of computers around the world. And it holds thousands of technology patents.
Potential for 200p?
So there’s great potential for the future of AI, yes?
I’d say there is, for sure. But I really don’t know how much of it will benefit a small company in Hong Kong that mostly does payment systems and things like that.
Still, to get back to the question, could the RC365 share price break 200p?
Well, yes, I really think it could. Whether it might stay there though, is a different question.
Share prices often soar way past the valuations that their current earnings suggest. The Nvidia P/E ratio peaked close to 150. Even today, at around 100, it’s very high compared to market averages.
Would I buy?
But any 200p surge would, I’m sure, only be based on sentiment. We’re looking at a penny stock here, with a market-cap of just £83m, and annual revenue of under £2m.
It might not take much of a buying spree to send a stock like this flying. But then it might not need too many sellers to send it crashing.
And that says two things about penny stocks. The risk can be big, and it can take nerves of steel to buy them.
So 200p next, or 2p? That’s a finger-in-the-air one for me. I’m out.
