RC365 Holding (LON: RCGH) made another of its announcements of a supposedly value enhancing deal today. At which point the shares dropped 16% which we think is about appropriate. For there’s very little to the deal other than the ability to issue another announcement to the stock exchange. And sure, in the past such announcements have led to RCGH share price boosts. But if it is a pump and dump - as others suggest it might be - then that tactic does wear out its welcome. The more there are announcements that seem to presage not very much then the more that question of ours - where’s the beef? - comes to the fore.
We should note that we’ve been bear on RC365 right from the start. Which, given the share price performance might have been too soon. But as far as we can tell the action all seems to be over in CfD and derivative channels, not major purchases on the exchange itself. That is, this is a speculative bubble, not the creation of a new financial markets powerhouse out in the Far East. For example, that first part of the bubble at RC365: “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.”
RC365 Holding share price from Google Finance
As the varied deals have come through we’ve talked about RC365 Holding and RCGH shares. To be frank about it we don’t believe a word. Sure, each and every exact statement made is true, they have signed this deal, are distributing that credit card. But the overall story? That there’s some new financial powerhouse being constructed? No, that story we simply do not believe. Possibly fun to have a bet upon but watch out for your fingers when you put your money down.
