SYME share price slide: Is Supply@me Capital a good UK share to buy?

The SYME share price has seen extreme volatility in recent weeks. Kirsteen Mackay investigates what exactly Supply@me Capital offers and whether it’s a good investment.

| 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.

I’ve been looking at covering Supply@me Capital (LSE:SYME) for a while, but couldn’t get my head round it. With billionaire Warren Buffett’s advice ringing in my ears: “Invest in what you know”, I thought if I can’t even get to grips with what this company does, it’s probably a warning to steer clear. However, with the SYME share price sliding after a significant rise, it’s again piqued my interest. I delved deeper to get a clearer understanding of what it’s about and whether it’s a good UK share to buy.

Inventory monetisation

  • It’s a fintech firm, meaning it utilises technology to offer a financial solution to businesses.
  • It’s giving companies an opportunity to make money from their inventory.
  • This inventory monetisation provides investors with a new asset class.

Combining these points, we come to the crux of the company. Supply@Me has created a unique trading platform (the tech in fintech) giving manufacturing and trading businesses a chance to improve their working capital (the fin). At the same time, it provides investors with an exciting new area to get involved in.

Putting inventory to work

Rather than be left with masses of unsold inventory sitting on company shelves, this platform gives companies a chance to generate cash flow from their unsold goods. The company can digitally add its inventory to the Supply@Me platform. In return it gets certificates corresponding to the size of its digital allocation. The company then exchanges the certificates for cash from Supply@Me. The company can use this cash to keep its business ticking over. Meanwhile, if it sells the inventory, it buys back the certificates, removing its goods from the platform.

 

Supply@Me Capital SYME share price
Source: Supply@Me Capital

Supply@Me uses a private blockchain and legal formats, which makes each transaction fixed and transparent and garners trust from all parties involved. It appeals to funders because it’s less risky than small business loans and they receive a coupon payment on each certificate issued.

SYME share price volatility

Since the beginning of August, the SYME share price has enjoyed a spectacular rise, up over 1,000% at one point. But since mid-August it has seen extreme volatility. At this stage it’s very much a speculative investment, but the European inventory financing market has a potential value of nearly €2 trillion, which is largely fuelling the positive sentiment. Harnessing even a tiny portion of this could mean massive upside for this share, propelling it to become a UK share to buy.

Covid-19 has boosted the likelihood of this business model becoming successful. The disruption to supply chains caused at the beginning of the pandemic showed weaknesses in the system. This option to monetise inventory could encourage companies to boost inventory levels, protecting against supply chain issues that may cause a future loss in sales.

So, the penny has finally dropped, and I now have a clearer understanding of what this strange sounding company does. Its business model looks credible, the market potential is astronomical, and its recent bull run proves there’s confidence in its ability to deliver. Would I invest? I don’t think I’m confident enough yet. I prefer to invest in companies with a sound track record, growth prospects, and a dividend yield. Although it has growth prospects, the other factors make me think it carries significant risk. For now, I’ll wait and see.

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.

Kirsteen 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

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »