The [email protected] Capital share price is up 750%: should you buy?

first_img Roland Head | Friday, 21st August, 2020 | More on: SYME Image source: Getty Images Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Roland Head 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. The high-calibre small-cap stock flying under the City’s radar The [email protected] Capital (LSE: SYME) share price is up by 15% as I write. Shares in this fintech newcomer have risen by more than 750% over the last month. This has pushed the firm’s market cap to more than £200m.Today’s lift appears to have been triggered by news that chairman Dominic White bought £1.5m of shares on 19 August. Although director buying is generally a positive, I do think the company’s valuation looks pretty steep for a business that reported revenue of just £416,000 in its latest accounts.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Investors appear to be betting that [email protected]’s inventory monetisation platform will deliver explosive growth and big profits.If they’re right, I could see [email protected]’s share price rising much further. So should you be buying?What does [email protected] Capital [email protected] Capital is a peer-to-peer platform that allows companies to borrow money against the value of their inventories, or unsold stock.The company says that it uses technology including blockchain and ERP integration to create a digital version of clients’ physical inventories. Legal ownership of these is then transferred to a special purpose company using “innovative legal schemes”. The client then receives a cash payment based on the value of the inventory, less a 15% deposit.Inventory financing isn’t new. But according to [email protected], one key difference with its offering is that it “is not treated as debt finance on a company’s balance sheet”.Let’s talk money: what’s SYME worth?As far as I can tell, [email protected] hasn’t actually completed any funding deals yet. According to the firm’s latest trading update, it has 97 clients with a total inventory value of around €1.4bn that are waiting for funding. That’s equivalent to around €15m of inventory per [email protected] expects to take a 2% royalty fee on each transaction. So €1.4bn of lending would generate revenue of around €28m. I’d expect fairly high profit margins, so this might be enough to justify [email protected]’s share price.However, I’d imagine that even if things go smoothly, closing this many funding deals could take a [email protected] Capital’s share price has surged since its last trading update, when CEO Alessandro Zamboni reported on progress with potential funding routes.Mr Zamboni is hoping to be able to attract banks and institutional investors to lend money through the firm’s technology platform. A number of parties are already said to be interested. I think that getting the banking of reputable banks and asset managers would be a good sign of credibility for this young [email protected] Capital share price: buy, sell or [email protected] Capital could be a great success. As it gains scale, profit margins on new funding could be very high. However, I also think this is one of the riskiest new stocks I’ve seen for a while.I have several specific concerns. I’m a little uncomfortable with the web of related parties which control around 75% of the stock.Another worry is the July loan deal that saw £4.6m of shares controlled by Mr Zamboni used as security for loans. I’m not suggesting any wrongdoing, but this technique is sometimes used to cash in shares without selling [email protected] is beyond my personal comfort zone. I won’t consider investing until I can see a track record of profitable operation. Right now, I think there are better growth opportunities elsewhere. Adventurous investors like you won’t want to miss out on what could be a truly astonishing opportunity…You see, over the past three years, this AIM-listed company has been quietly powering ahead… rewarding its shareholders with generous share price growth thanks to a carefully orchestrated ‘buy and build’ strategy.And with a first-class management team at the helm, a proven, well-executed business model, plus market-leading positions in high-margin, niche products… our analysts believe there’s still plenty more potential growth in the pipeline.Here’s your chance to discover exactly what has got our Motley Fool UK investment team all hot-under-the-collar about this tiny £350+ million enterprise… inside a specially prepared free investment report.But here’s the really exciting part… right now, we believe many UK investors have quite simply never heard of this company before! Our 6 ‘Best Buys Now’ Sharescenter_img Simply click below to discover how you can take advantage of this. See all posts by Roland Head The [email protected] Capital share price is up 750%: should you buy? Enter Your Email Address I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Click here to claim your copy of this special investment report — and we’ll tell you the name of this Top Small-Cap Stock… free of charge!last_img read more