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RC365 Holdings, RCGH, Up 17% After 20% Yesterday – What Next?

Tim Worstall
Tim Worstall trader
Updated 30 Mar 2022

Trade RC365 Shares Your Capital Is At Risk

Key points:

  • RC365 Holdings is a new addition to the main market in London
  • RCGH shares rose 20% yesterday, another 17% this morning
  • What next for this Far East fintech firm?
  • Upcoming IPOs to Look For

RC365 Holdings (LON: RCGH) shares are a new addition to the main market in London. The IPO happened on March 23 and the share price was entirely static until yesterday when it rose 1.5 pence, or 20%, and change, to 8.5. Today sees another 1.5p rise, but of course, this is only 17% or so.

RC365 is a fintech company operating out in Hong Kong and China. Or, as it describes itself, a “fintech solutions services provider” which sounds much more impressive. There are really two parts to the company. The first is payment gateway solutions and the second IT support and security services.

The payment gateway part is really concentrated on Asian customers at present.

The aim of RC365 in the near future is to expand its geographic provision into the UK and European markets. The aim of the listing is to gain access to capital to fund the various growth initiatives they wish to pursue.

Also Read: The Best Financial Stocks to Buy Right Now

All of which is fine and interesting of course but as traders what we want to know is which direction is that RC365 share price heading? So that we can position ourselves to be ahead of it, of course.

RC365 raised £2 million at the issue price of 6.2 pence which means that it does have some capital to pursue those expansionary desires of course. But it’s also true that the market capitalisation is currently just above £9 million. There’s also not much liquidity, as of pixel time trade volume for today was 3,900 shares, amounting to £390 in value terms. Yes, that’s three hundred and ninety pounds only.

As we would expect with such a small volume of trades (there were only two trades listed for yesterday, amounting to £807.80) there’s a substantial spread on RC365 shares. Actually, there’s an enormous spread on RC365 stock. The current quote is 8 pence to 12 pence. That’s a 50% spread if we measure it from the bid price.

This does mean that trading in and out of RC365 shares is unlikely to work if done with any rapidity. Just too much of any price movement will be left with the market maker for anything other than an extreme price movement to make a profit.

RC365 shares are therefore not amenable to a liquid trading stance. It’s entirely possible to take a long-term view and by all means do so. Views on the likely success of Far East payment processors and solutions providers might well vary. But for it to be useful to have an active trading stance – moving in and out of variations in the price – will require that there be much more trade or liquidity in RC365 shares. For that’s the only way that the spread will come down and it be possible to profit from anything other than extreme share price movements.

Tim Worstall
Tim Worstall is a freelance writer specialising in economics and the financial markets.