Interested in the Supply@ME Capital share price? Here’s what you need to know

The Supply@ME Capital share price has surged. But is the company still worth buying after this performance, or should it be avoided?

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The Supply@ME Capital (LSE: SYME) share price has surged in value during the past month. Shares in the small-cap have risen around 1,000% over the past four weeks.

This performance has put the company on the radar of most small-cap investors. The improving investor sentiment towards the business could send the Supply@ME Capital share price even higher in the near term.

If you’re interested in owning a share of this high growth small-cap, here’s what you need to know before investing. 

Time to buy the Supply@ME Capital share price?

Supply@ME Capital started its life as Abal Group. Following the completion of the disposal of its core operating business (known as Imaginatik), the firm became a cash shell and dealing in its shares was suspended.

Abel changed its name earlier this year after the company agreed on the acquisition of Supply@Me Srl. Trading in its shares has since resumed.

Supply@Me is an early-stage financial technology, or FinTech business. It operates a technology platform that enables manufacturing and trading customers to improve their working capital position by releasing capital from their inventory stock.

The business model is similar to other peer-to-peer lenders. The company matches capital invested by its inventory funders to enterprises that need money. The platform earns a fee on the income generated from the loans and “inventory monetisation“.

As the business is only just getting started, it isn’t easy to figure out how much the Supply@ME Capital share price is worth. That said, it’s clear the company has tremendous potential.

It originated more than €300m of prospective “inventory monetisation transactions” in its first six months of operation. Meanwhile, it’s estimated that the total size of the inventory financing market is €2trn. 

If this FinTech business can grab just 1% of the total addressable market, the Supply@ME Capital share price may be able to continue its impressive performance. That 1% could mean €200bn of prospective inventory monetisation transactions for the firm. By comparison, the current market capitalisation of the group is just over £100m. 

Therefore, the Supply@ME Capital share price looks cheap based on its potential market.

Diversification is key

However, it could be some time before the company reaches this point. Small-cap companies are notorious for missing their targets. Investors shouldn’t overlook this fact when evaluating Supply@ME, no matter how attractive the opportunity might seem.

Many peer-to-peer companies have failed to live up to expectations in the past. Some of these companies have caused substantial losses for their shareholders and funders on platforms. 

As such, it may be best for investors who want to own the Supply@ME Capital share price to do so as part of a well-diversified portfolio. The company’s potential market is enormous. But we can’t overlook the fact that so many peer-to-peer companies have struggled to make it to the big time over the past decade.

Owning the stock in a diversified portfolio would allow shareholders to benefit from any upside while limiting downside risk.

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.

Rupert Hargreaves owns no share 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.

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