RC365 Holdings (LON: RCGH) soared 400% and more over the past couple of weeks. It's today down 23% and that follows earlier falls as well. We did say that we didn't think that the rise would be sustained. It's just that now we can all see exactly how all the moving parts of the system worked. A substantial - by the standards of the part of the stock market we're talking about at least - piece of money has been taken off the table. In a really rather clever way.
So, as we said about RC365 Holdings: “RC365 Holdings (LON: RCGH) shares are up 200% (at times) this morning in London. We've absolutely no news at all explaining why this might be so. At least at our pixel time there's no corporate news release, nothing to the exchange. Also nothing on the wires or in press releases. It's, therefore, necessary to speculate on why this might be, what could be happening. Our assumption - the absence of any other information - is that we're getting a slight Americanisation of the London market here.” Vaguely Hong Kong, China, financial market, shares have been hugely volatile over on NASDAQ in recent months. So, is that coming to London?
Then, as more became known about RC365: “Now let's recast this RC365 Holding idea. RCGH is being paid some £1.5 million to write a wealth management app for an £8 million a year turnover company. It's also just an upgrade to the extant product. This collaboration, this contract, has added £80 million to the market capitalization of RC365 Holdings in London? No, we do not believe that this is a rational reaction, nor do we believe it's a justified one on the substance of the deal. “
RC 365 Holding share price from London Stock Exchange
And now the last piece of the scheme drops into place.” Issuer: RC365 HOLDING PLC, Seller of stock: Hatcher Group Limited, number of shares sold: 5.5 million, date: 22-Jun-2023.”
Ah. On 22 June RC 365 was up at 80 pence and above (often above, during the day). Before this all started RC365 was at 20 pence and change.
So, Hatcher Group hires RC365 for £1.5 million to write an app. This increases the price of RC365. Hatcher Group then sells shares for a £4 million or so profit above the price they would have got before the announcement about the app contract. RC365 shares begin to decline significantly once the share sale is announced to the market.
Well, yes, OK. Clever. Works, is wholly and entirely legal. Wish we'd thought of it ourselves in fact, even if we did still manage to spot that there was something that wasn't going to make us shareholders out here rich about it all.
But, umm, the likelihood that this is going to make money for RC365 shareholders at current prices? Slim we would have thought, really very slim.
