The RC365 (LSE:RCGH) share price is back to near its starting point. The stock was listed at a price of 6.2p per ordinary share in March 2022. Today the shares, which had traded as high as 180p, are now worth just 8.5p each.
So what’s going on here?
The rise
It’s hard to put my finger on exactly why the RC365 share price rose more than 700% in the year to July.
One trigger may have been the (possibly) sponsored article entitled ‘Missed Nvidia? This London-based AI stock has the potential to achieve a remarkable surge of over 1,000%’.
Ironically, when the article started circulating around April, investors hadn’t missed the Nvidia rally. The chipmaker has seen its share price rise 70% since then.
This article also overlapped with several announcements including a memorandum of understanding with the Hong Kong-listed Hatcher Group, centred around delivering solutions in the field of artificial intelligence (AI).
Other announcements included:
- The purchase of Mr Meal Production Limited
- New business collaborations with APEC Business Services
- A deal to feature its brand on Mastercard credit cards for Hong Kong residents
- A deal to feature its brand on Mastercard credit cards in Malaysia
However, there is little evidence these contracts justified its soaring share price.
The fall
Since the summer, RC365 shares have fallen from heights around 180p. At its peak, the stock was trading at 133 times sales. That’s incredibly expensive, considering a price-to-sales ratio of 10 is normally considered expensive.
By comparison, at its peak, Nvidia was trading around 40 times sales. However, the GPU (Graphics Processing Units) maker has delivered earnings beat after earnings beat and we’ve thus seen the company’s price-to-sales ratio fall dramatically. On a forward basis, Nvidia now trades at 20.1 times earnings.
Moreover, results have failed to impress. If anyone thought RC365 would deliver Nvidia-like growth, they’ve certainly been wrong.
In fact, it’s still loss-making. Losses for the 12 months to 31 March amounted to HKD5.4m (£530k), up from HKD3.9m in the previous year. However, at least on a positive note, revenue increase by 109% to HKD16.9m (£1.6m).
Latest update
RC365 has continued making deals and announcements, but none of them have positively influenced the share price since the summer.
For example, in the company’s latest announcement, it said that Regal Crown Technology — a RC365 subsidiary — would be a co-sponsor of the Hong Kong Economic Summit 2024, organised by Metro Finance.
The event took place on 4 December at the Four Seasons Hotel Auditorium in central Hong Kong, however there was surprisingly little coverage.
But RC365 said the event brought together influential leaders to share insights on the strengths of Hong Kong and ways to foster diversification of industries.
