RC365 (LSE: RCGH) shares are the stuff of dreams. They’ve made early bird investors rich in a matter of months and everybody else jealous as hell.
Over one year, the fintech solutions service provider’s stock is up a mind-boggling 866%. It has spiked and spiked again, with the share price soaring 607% in just three months. I thought my Rolls-Royce shares were doing well. They’re up 3.09% over the same period.
This kind of return plays tricks with the mind. I keep doing all sorts of crazy sums in my head. What if I bought the stock 12 months ago? Six months ago? Three months?
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Let’s go for three months and assume I invested my entire Stocks and Shares ISA portfolio for the 2023/24 tax year in RC365. Today, I’d have £141,400 and my retirement plans would be looking a lot brighter.
Approach with extreme caution
Enough! That was never going to happen because I hadn’t even heard of RC365 until a few weeks ago. And I bet that applies to most wannabe traders who are wondering whether to pile into the stock today.
When I buy a stock, I like to weigh up a host of factors such as profit growth, dividend history, valuation, customer loyalty, competitor threats, geopolitical risks and so on. By contrast, deciding whether to buy RC365 proved surprisingly easy. I just looked at its insane share price chart and the answer was no.
Right now, it’s going to be attracting a heap of crazy head traders who don’t care about the underlying business but simply want to make a fast buck and run. For most, it will be a losing bet. They’ll buy too late or hold too long, and probably both.
RC365 is no longer an investment, but a game. Worse, most investors will be playing with partial information. We know so little about it.
RC365 was founded in Hong Kong in 2013 and debuted on the LSE in March 2022 with a market-cap was £6.7m. Today, it’s more than £163m, up 25-fold. The company operates a secure payment gateway service aimed at helping members of the Asian community make efficient cross-border transfers.
It’s a bit of a mystery
So far, it’s only published one annual report and a half-yearly follow-up covering the six months to 30 September 2022. This reported two “major acquisitions” and revenues of HKD7.9m (£785,000), up from HKD2.7m in 2021. That’s an increase of 292%.
It made a loss after tax of HKD3m though, after turning a HKD500,000 profit the year before. The group “is actively exploring a number of opportunities by forming different types of business relationships with corporates located in United Kingdom, Singapore and Hong Kong”.
Those may prove very rewarding opportunities, for all I know. The problem is, I don’t know much at all. My colleagues on the Fool have dug deeper but their knowledge is limited too. What I do know is this. Small companies that rocket upwards have a nasty habit of falling just as fast.
I won’t be lured into RC365 for fear of missing out. I’ve already missed out. Finished. Over. Move on.
