This year, the most hyped stock is undoubtedly The Smarter Web Company – headed up by ex-Hargreaves Lansdown man Andrew Webley. Now anyone who had come across this company prior to its listing in April, may be forgiven for not quite understanding the hype and valuation of this (checks notes) web design company. At its peak the company was valued at £1b and was the most successful stock market listing London had ever seen – not bad considering Mr Webley listed his company on the typically illiquid Aquis exchange. So whats so special about SWC and why is it commanding such a high valuation? The answer is the latest craze to hit the lower hanging fruit of the UK stock market – BTC treasury companies. Jumping on the bandwagon of MicroStrategy – the US listed tech company headed by Michael Saylor – a plethora of UK micro caps have jumped in head first.
I mention Smarter Web Company specifically, as it was the first to employ this new investment product on the UK market. Unfortunately for me, SWC falls neatly into my missed opportunity pile – I’m not bitter, honest.. From the day it listed, right up until today, I am completely perplexed by the business model. It involves everything the typical investor runs a mile from – over hyped on social media, valuation far exceeding NAV, consistent capital raises in order to buy ever more BTC – dilution has never been the friend of the small cap investor, yet here we are. That said you simply cannot question the success of SWC, early investors are laughing all the way to the bank as their initial investments have multi-bagged and multi-bagged again. At the stocks absolute peaked it had returned over 100x for those lucky enough to get in at the initial fundraise at around 4p.
Since then, SWC has come back down to earth ever so slightly, but today still commands a very respectable share price of £2.10/share – not bad at all, especially only two months after listing. The question is now – will the upward trajectory continue? If only I had a crystal ball! As it stands i think SWC may still have a run or two left in it, there seems to still be an appetite for investors to buy into capital raises at multiples to NAV, until the money dries up, i think the stock may well continue to rise. Will i buy the dip – No and like when i first took the decision not to take a position, ill likely regret it – again!
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