British bitcoin company goes from £4M to £1BILLION in just two months on the stock market
'I'd like to be a FTSE 100 company,' Andrew Webley, founder of The Smarter Web Company told This is Money upon listing on the UK stock market in April.
This is Money used his quote again two weeks later, when we reported that Webley's high-risk firm had seen its share price double on the Aquis Exchange it is listed on.
At the time this perhaps seemed a lofty ambition for a company with a market cap of £3.7million following its IPO, although that was notably oversubscribed.
'People might laugh when I say that,' Webley said at the time. Now, two months later, it is doubtful many are, except for Webley who at this rate may be laughing all the way to the Footsie.
On Friday afternoon, Webley's Smarter Web Company surpassed a billion-pound market cap, reaching £1.1billion at the time of writing.
The key to its rapid growth is not the firm's core business - web design - but Webley's strategy of becoming a bitcoin treasury company, allowing stock market investors to back it holding large amounts of the crypto.
This is a move that has paid off handsomely for US firm MicroStrategy but had not been done before in the UK.
It makes Smarter an extremely high risk investment - and Webley himself says that it has 'beefed up the risk warnings' and he doesn't want people investing who don't understand what it is doing.
The next most valuable company trading on Aquis, housing and social care provider Mears Group, is worth just a third of Smarter, at around £347million.
In fact, if traded on the London Stock Exchange, Smarter's current market cap would place in the top half of the FTSE 250, broadly level with household names Pets at Home, Trainline and Wizz Air.
It won't come as a shock that Webley feels he is proving his doubters wrong.
He told This is Money: 'I said it, and I believed it at the time, and I still believe it.
'Now we are actually of the size that if we move to the London Stock Exchange, which may happen in the near future, potentially, then we would be in the FTSE 250.'
We bought 104 bitcoin this week
On 19 June, Smarter made further bitcoin purchases of 104.28 bitcoin, at an average of £77,751 per token. This increased the firm's bitcoin treasury to some £27million worth.
Smarter also announced it has signed a subscription agreement for a further 21 million new shares, which could see it raise a further £80million or so.
By issuing new shares into a market hungry to buy them, a company can increase its cash balance. In a bitcoin treasury company's case this can then be deployed to buy more of the crypto.
Earlier in the week, the firm raised £29.3million through the issue of 16million new shares at 180p each. On Friday, Smarter shares had risen to 500p on Aquis.
This valued Smarter Web Company at an astonishing £1.1billion at the close of trading for the week. More than 250 times the valuation it listed at in April.
It doesn't take a financial wizard to see that there is a big gap between Smarter Web Company's bitcoin treasury holding and its total valuation, however.
It's safe to say that things are moving rapidly for the firm, with its market cap a week ago less than half of what it is today. So, how can that be justified?
According to Webley, and based on a bitcoin metric known as 'days to cover mNAV', it would take Smarter around 35 days 'grow into its valuation'.
The metric measures how long it would take a firm to accumulate enough bitcoin to reflect its market cap based on its current multiple of net asset value and daily bitcoin yield.
In comparison, Strategy, as MicroStrategy is now known, has a 626-day horizon to earn its mNAV, according to Coindesk.
We've really beefed up the risk warnings
'I know all these metrics are new to a lot of people that haven't been in the space for as long as me,' Webley said, 'I understand why we trade like we trade, and it's not for everyone
'We've really beefed up the risk warnings because we really want to be transparent, and we don't want people buying our shares if they don't understand what we're doing.
'We have been working really hard, harder than the regulators have asked us to work, on making everything as transparent as it can be.'
Since the beginning of the week, it has also appointed a bitcoin strategy consultant, Jesse Myers. Smarter says Myers' bitcoin valuation framework was adopted by Michael Saylor when he was chief executive of MicroStrategy.
In fact, Webley claims this is the key to his success; Smarter is following well-trodden path.
He said: 'If you look at companies that do something similar to what I do globally, what is happening?
'Yes, it's a bit faster for us. Maybe that's because no one's done it in the UK before. But it's not actually different to what's happened in other countries. Yes, it's surprised me. But no, it's not unusual for a company that's doing what I'm doing.'
Suffice it to say, not everyone is convinced that investing in a company like Smarter is a wise move. Like bitcoin and crypto, such shares are an extremely high risk proposition and the risk is magnified by the gap between a company's valuation and holdings.
Webley told This is Money: 'I'm doing exactly what I said I'd do very honestly and transparently. I'm keeping everyone informed.
'I said to you right at the start [prior to the IPO] that I wanted to do something that the UK could be proud of. And if it's making a difference to people's lives because they believe in the strategy, and we're hopefully going to perform in the long term, then that's a really cool thing.'
What the rapid ascent has done though, is make Webley and Smarter shift their plans to the larger side.
He says: 'The thing that has evolved is that initially we were thinking of acquiring companies with around £500,000 free cash flow, profitable businesses but small ones.
'Realistically, the size of these acquisitions is going to have to be bigger.'
He added: 'I'm happy to share that we have already looked at three acquisitions, but none of them were quite right.'
Nor has the core business, web design, been neglected.
'I still pick up the phone and I speak to people when they inquire,' Webley said, 'I'm absolutely convinced the listing is making a difference to our business, the inquiries are definitely up, the web traffic that we're getting is way up.
'If you do this treasury management strategy properly, you can then actually grow your core business, and in our case, the acquisition strategy.'
This is just the beginning, he says.
'I'm very, very much looking forward to the future… the sky's the limit with this. If we can execute the strategy properly, with integrity and transparency, then there really isn't a limit on it.'
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