This Penny Stock Just Doubled on a Blockchain Expansion. Should You Buy Shares Here?

NCPL -8.62%

Netcapital (NCPL) shares have roughly doubled this week after the company hired Rich Wheeless as its new chief executive and announced an acquisition that signals its pivot into digital assets.

Wheeless brings over two decades of financial leadership experience, including previous roles as CFO at blockchain firms Taal and Rivetz, positioning him well to execute NCPL’s transformation strategy.

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Despite an explosive move to the upside, however, Netcapital stock is trading only at a fraction of its price in early July.

Why Netcapital Stock Still Isn’t Worth Owning

While the blockchain pivot sure appears constructive for NCPL shares, investors must still practice caution in playing them at current levels for several reasons.

For starters, the company has granted a massive inducement award of 1,000,000 shares to its new CEO, with vesting tied to achieving a modest $1.5 million in revenue by early 2027.

What it suggests is that insider expectations for revenue growth remain rather conservative despite the ambitious crypto strategy.

Moreover, the Rivetz acquisition will dilute existing shareholders through the issuance of 95,000 shares, potentially impacting per-share value in the near term.

NCPL Shares Continue to Face Delisting Risk

Netcapital shares remain unattractive for the new year also because much of the upside related to its blockchain expansion and management change looks priced in already.

Plus, execution risk remains high as the company transitions from a traditional securities platform to include cryptocurrency and blockchain investments in an increasingly competitive and regulated environment.

Netcapital’s penny stock status makes it vulnerable to excess volatility, while the risk of a potential delisting remains on the table as well given it continues to hover around the $1 level even after the recent surge.

What’s also worth mentioning is that NCPL stock is still trading decisively below its major moving averages (MA), indicating the broader downward momentum remains intact.

Wall Street Isn’t Interested in Covering Netcapital

Another major red flag on owning Netcapital stock is the absence of Wall Street coverage.

This means you’re on your own when it comes to evaluating NCPL shares’ valuation and their future prospects.

This article was generated with the support of AI and reviewed by an editor. On the date of publication, the editor did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com