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By Gary Newman | Monday 12 March 2018
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Currently it seems that the mere mention of cryptocurrency or blockchain can drive investors into a frenzy, with people thinking that the new Bitcoin is about to be born, when the actual reality is that most of these companies will ultimately fail. It seems to be a bit of a ruse that is being used at the lower end of AIM, whereby the company announces some sort of involvement in this field, knowing that it will gain some interest as a result.
On-Line PLC seems to have done exactly that at the end of 2017 when it changed its name to Online Blockchain (OBC), and then at the start of the year saw its share price rocket to 186p just a day before large-scale dilution came with the issue of 1 million shares at 100p. Since then it has been on the decline, and now trades at around 80p to buy, but even at that level it is hard to see how the £6.58 million market cap is really justified.
It does own 17.98% of share information and financial tools website, ADVFN (AFN), which is valued around £2 million at the current share price, although there is virtually no liquidity currently in these shares, so it would be unlikely to be able to cash in for that amount. I also can’t see the announcement which came after hours last Friday being taken too well either, as it announced the amended sale terms for Equity Holdings Limited. In reality this investment had already been written down to zero carrying value in the accounts, but investors may still not be overly impressed that all received is to be £50,000 in cash plus 30% of the EHL shares, to settle outstanding amounts of £200,000 in cash as part of the sale, plus the repayment of a £1 million loan note.
The value of this holding in the future will be dictated by the performance of ADVFN, and for the time being at least I struggle to see the share price there rising dramatically – at the last accounts it had net assets of around £1.7 million and a market valuation of over £11 million currently. What really seems to have been exciting investors though is that the company has its own cryptocurrency, called PlusOneCoin, and it has recently been tested within the ADVFN platform.
This comes along with a PlusOneCoin wallet to store the ‘social media crytocurrency’, and it can be exchanged for services and products within the site, as well as being used to vote-up social media content. On the website it is spoken about alongside Bitcoin and Ethereum – no coincidence I’m sure – and it can also be mined, as well as given, swapped or bought. It is traded on the Satoshi exchange, and is listed as being worth 0.00000555 of a Bitcoin to sell (or somewhere around 5 Cents per coin), but trading in it is hardly high volume with trade numbers barely into double-figures most days and the amounts changing hands being very low, with up to 500 coins in most cases (or $25 worth).
There is of course always the chance that it could really take off and that the value of the coins will rise, but I see that as a real long shot and would expect it to eventually fall by the wayside like so many other of these ‘cryptocurrencies’ ultimately will do. Around 20% of the coins were pre-mined, out of a total supply of 26 million, and at today’s prices that would give it a total value of around $1.3 million.
In the past the directors of Online Blockchain haven’t been taking salaries and have instead received share options – at the end of the last financial year up to June 30 2017 there were 450,000 options outstanding at a 20p exercise price, relating to this. This has meant that the company has actually been able to record a small net profit - £18,000 for last year. I just see it hard to justify the current market cap though based on an investment in an illiquid stock which would be hard to sell, plus around £1 million in the bank as a result of the placing.
Not that I ever see it selling its holding in ADVFN anyway given the close relationship between the two companies – ADVFN co-founder Clem Chambers is CEO and holds 17.66% of the stock, with fellow co-founder, and chairman, Michael Hodges holding 15.77%. So, even though some might see value now that it has dropped back after the huge rise that we saw purely as a result of the name change, I still struggle to see value here at the current market cap and think that too much emphasis is still being given to the fact that ‘blockchain’ features in its name!
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