When I last covered the Smarter Web Company, in June, I was quite bearish on it. At the time, I stated that it was a high-risk investment.
Since then, its share price has fallen from around 500p to 33p – a decline of approximately 93%. So, I was right to be bearish on it (hopefully my analysis saved a few investors from getting badly burnt).
Is the stock worth buying at 33p? I’m not convinced.
One of the main reasons this stock saw interest last year was that it offered a way to get Bitcoin exposure in a Stocks and Shares ISA or SIPP. At the time, the FCA had banned crypto ETNs and ETPs for retail investors.
The FCA has since lifted the ban on these products, however. So, UK investors are likely to have many different ways to access crypto-assets in the future, meaning less need for Smarter Web Company and other crypto treasury companies (these companies may find it harder to raise money to buy more Bitcoin in the future).
I will point out that there are some reasons to be bullish here today. Currently, Smarter Web Company owns 2,664 Bitcoins. At today’s Bitcoin price, these Bitcoins are worth about £180 million. Yet the company’s market cap is only around £100 million. So, there could be a value opportunity here.
It’s worth noting that right now, the price of Bitcoin is depressed. If it was to rally again, it would boost the value of the Smarter Web Company’s holdings and probably also its share price. There are no guarantees that Bitcoin will rise in the near term though. Recently, interest in crypto has been declining with Google searches of “Bitcoin” falling dramatically.
In summary, the stock looks more attractive at 33p than when it was trading at 500p. However, I still see it as a high-risk investment.
