The RC365 Holding (LSE: RCGH) share price just went wild.
Depending on which start and end days we take, over the past few weeks the share price has been up anywhere between 500% and 2,000%.
So what’s been happening? Should I buy this growth stock right now? My short answer is no. But let me explain.
What happened?
RC365 does payment solutions, IT support, and a number of other things that don’t appear to be all that related to each other.
None of that sounds like it should drive such massive growth in such a short time.
The company has lined up a few deals, but nothing that… Oh, wait, there’s some talk of tie-up with someone listed in Hong Kong that’s something to do with artificial intelligence (AI).
Now, AI has been causing some excitement of late, but jumping on the bandwagon just because it’s mentioned sounds eerily familiar. Oh yes, that’s it, does anyone remember the dot com bubble?
Boom and bust
When that happened around the start of the century, stocks even remotely related to the internet went through the roof.
They nearly all crashed and burned, of course. Is that what’s happening here?
Well, there’s also been an article doing the rounds, entitled ‘Missed Nvidia? This London AI stock could jump over 1,000%‘. No idea where it came from, but a number of different writers appear to have posted it.
Most seem to have been taken down now. But searching again I just found ‘Missing The AI Run? This London Stock Could Jump 500%‘.
And I’m getting that eerie familiar feeling again.
Seen it before
In 2022, a similar claim did the rounds concerning African wood producer Woodbois. It too made claims of 1,000% gains to come, even 2,000% in some versions.
But it didn’t happen. In fact, it went in the opposite direction.
In this new one, there’s a lot of talk pumping up the future of AI. But there’s actually nothing at all about RC365. Well, except that it’s supposed to have an AI connection.
Did I say pump there?
Pump and dump
I can’t tell who’s actually making these fantastical claims, although I’m sure it’s nobody connected with the company.
But there’s a common scam known as a ‘pump and dump’. Someone buys some shares, and then creates a story full of wild claims and manages to push it to viral proportions.
The stock soars, they sell, and we can guess what comes next.
The companies themselves are usually victims too. They can be perfectly honest, but just have a couple of key things that mark them out.
Penny stocks
They’re typically penny stocks, and have some connection to something high-tech that might be about to boom.
So what will I do about this one? Right now, just ignore it. I haven’t even looked into RC365, and it might be a good long-term investment. I really don’t know.
But when this kind of hype is going round, it’s a sure sign for me to get my bargepole out.
This post was originally published on Motley Fool
