At the time of writing, Webley’s Smarter Web Company had a market valuation of £1.1 billion, surpassing a billion pounds on Friday afternoon.
Webley’s strategy of turning into a bitcoin treasury company, which enables stock market investors to support it holding significant amounts of the cryptocurrency, is the secret to its explosive growth, not the company’s primary business of web design.
This might have seemed like a big goal at the time for a company that had a market valuation of £3.7 million after its IPO, even though it was noticeably oversubscribed.
“When I say that, people might laugh,” Webley remarked at the time. With the exception of Webley, who might be laughing all the way to the Footsie at this rate, it is unlikely that many people are now, two months later.
MicroStrategy, a US company, has benefited greatly from this move, which has never been done in the UK.
Because of this, Smarter is a very risky investment. According to Webley, this has “beefed up the risk warnings,” and he doesn’t want investors who don’t know what they’re getting into.
At about £347 million, the housing and social care provider Mears Group, the second most valuable company listed on Aquis, is only worth a third of Smarter.
Actually, if Smarter’s current market capitalisation were listed on the London Stock Exchange, it would rank in the top half of the FTSE 250, roughly on par with well-known companies Pets at Home, Trainline, and Wizz Air.
The fact that Webley believes he is disproving his sceptics won’t be shocking.
“I said it, and I believed it at the time, and I still believe it,” he told This is Money.
“At this point, we are big enough that we could be in the FTSE 250 if we move to the London Stock Exchange, which could happen soon.”
We bought 104 bitcoin this week
Smarter bought an additional 104.28 bitcoin on June 19th, averaging £77,751 per token. As a result, the company’s bitcoin treasury now stands at about £27 million.
Additionally, Smarter revealed that it has inked a subscription deal for an additional 21 million shares, potentially raising an additional £80 million.
A business can boost its cash balance by issuing new shares to a market eager to purchase them. This can then be used by a bitcoin treasury company to purchase additional cryptocurrency.
The company issued 16 million new shares at a price of 180p each earlier in the week, raising £29.3 million. Shares of Smarter had increased to 500p on Aquis on Friday.
At the end of the week, Smarter Web Company was worth an incredible £1.1 billion. more than 250 times the April listing price.
But it doesn’t take a financial whiz to see that Smarter Web Company’s total valuation and its bitcoin treasury holdings differ significantly.
Given that the company’s market capitalisation was less than half of what it is now, it is safe to say that things are moving quickly for it. How, then, is that justified?
Webley claims that it would take Smarter about 35 days to “grow into its valuation” based on a bitcoin metric called “days to cover mNAV.”
Based on the company’s current multiple of net asset value and daily bitcoin yield, the metric calculates how long it would take for it to amass enough bitcoin to match its market capitalisation.
According to Coindesk, Strategy, as MicroStrategy is currently known, has a 626-day horizon to earn its mNAV.
We have significantly strengthened the risk warnings.
“I am aware that many people who haven’t been in the industry as long as I have are unfamiliar with all of these metrics,” Webley stated. “I know why we trade the way we do, and it’s not for everyone.”
Because we want to be transparent and don’t want people purchasing our shares if they don’t understand what we’re doing, we’ve strengthened the risk warnings.
“We have been working really hard to make everything as transparent as possible—harder than the regulators asked us to.”
Additionally, it has hired Jesse Myers, a bitcoin strategy consultant, since the start of the week. According to Smarter, Michael Saylor, the CEO of MicroStrategy, used Myers’ bitcoin valuation framework.
Smarter is taking the well-traveled route, which Webley says is the secret to his success.
“If you look at companies that do something similar to what I do globally, what is happening?” he asked.
Yes, it’s a little quicker for us. Perhaps that’s because no one has ever done it in the UK. However, it isn’t really any different from what has occurred in other nations. Yes, I was taken aback. However, it’s not out of the ordinary for a business that does what I do.
Let’s just say that not everyone agrees that it makes sense to invest in a business like Smarter. Similar to bitcoin and cryptocurrency, these shares carry a very high risk, which is increased by the discrepancy between a company’s holdings and valuation.
“In April, Andrew Webley was planning to invest just £30,000 into Smarter Web Company through his Isa,” stated Glen Goodman, author of the book The Crypto Trader. Two months later, his family’s stake in the company is worth £120 million, and it is valued at a billion pounds.
“Small business owners must be kicking themselves in Britain.” Although many of them could have done what Andrew Webley did, he deserves special recognition for having the courage to carry it out.
Because the FCA forbade retail investors from placing bitcoin investments in their Isas, he saw a significant void in the market for bitcoin investment vehicles.
Webley found a way around that, and since he transformed Smarter Web into a bitcoin investment fund of sorts, investors are swarming to the site.
In my 25 years in the market, Smarter Web Company is arguably the most overpriced share I have ever seen. Investors value the company at over a billion pounds, but if you sold all of the bitcoin it currently owns, you would only make £27 million.
I wanted to do something that the UK could be proud of, and I told you that right from the beginning [before the IPO]. And it’s a really cool thing if it’s improving people’s lives because they trust the plan, and we anticipate long-term success.
However, the quick ascent has forced Webley and Smarter to change their plans to something more ambitious.
“The thing that has changed is that at first we were considering buying businesses with about £500,000 in free cash flow, which were small but profitable,” he says.
“Really, these acquisitions will need to be larger in size.”
“I’m happy to share that we have already looked at three acquisitions, but none of them were quite right,” he continued.
Additionally, web design, the main business, has not been overlooked.
“I still answer the phone and talk to people when they have questions,” Webley stated. “I’m positive that the listing is helping our business; the number of enquiries is definitely increasing, and the amount of web traffic we’re receiving is significantly increasing.”
“You can genuinely expand your core business and, in our case, the acquisition strategy if you execute this treasury management strategy correctly.”
“This is only the beginning,” he says.
“I’m really, really excited about the future.” With this, the possibilities are endless. There truly isn’t a limit to the strategy if we can carry it out correctly, honourably, and openly.
