RC365 Holding (LON: RCGH) shares are down 81% from their peak. RCGH shares are down simply because fewer people believe the story and so are getting out of their positions. We would like to just point out that we’ve been saying this was going to be so all along. Yes, there’s a fashion for meme stocking Hong Kong and Far East based financial microcaps. That was more on NASDAQ than in London but we did warn that this is what it was looking like at RC365. We’ve also looked at the deals they announce as they announce them and insisted they’re simply not as valuable as some speculators seemed to think. We’re not the only people who thought this was akin to a pump and dump either.
The RC365 share price is only the one indicator:
RC365 Holding share price from Google Finance
We’ve been persistently bearish all through the RC365 story: “RC365 Holding (LON: RCGH) is, according to the London Stock Market, now worth £100 million. That's up from perhaps £20 million a week back.This is one of those valuations that we simply do not believe. Of course, the valuation is correct, there's no arguing with prices. But we'd suggest that this is an excess of speculative fervour rather than an objective view of reality. “ The deal that caused that at RCGH: “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…” but it did mean that we didn’t particularly believe any of the further stories that arrived.
For example, there was the signing up to be a credit card distributor: “Now think on this for a moment. At that 60 pence - before this latest announcement - RCHG had a market capitalisation of some £60 million, give or take. After the announcement it's at £120 million (actually, £118 million). So, the additional value from this announcement is £60 million. That's applying a valuation of £20,000 to each credit card issued. That's absurd.” And we’ve never quite worked out what the added value of signing up with American Hemp was supposed to be: “Hmm. We’d note that until March YouneeqAI was in fact American Hemp. Which is quite a change but it’s also the leaving of one formerly hot sector, hemp, for the new new hot sector, AI. We’d also note that YouneeqAI is valued, in toto, at some $13 million. Which makes the £6 million (3 million shares now, 3 million in a year) plus a 1% royalty that RC365 is paying for access to the software look really very high indeed. And this buys only the UK usage rights.”
Now, the precise definition of a pump and dump is when someone deliberately, knowingly, pumps up a share price in order to be able to sell their own holding at the top of the market - the dump. No, we do not allege such illegal activity here (yes, pumps and dumps are illegal on stock markets, not so much in bond markets). We’ll instead insist that we can see from the share price changes that the speculative frenzy rather got away with itself at RC365 Holding. As we’ve been saying all along about RCGH shares.
