How does a £6.5bn FTSE 100 giant trading at £40 a share collapse into penny stock territory in just five years? 

That’s the story of Synthomer (LSE:SYNT), a chemical company that enjoyed exceptional growth during the pandemic — but dropped 97% since.

At the lowest point this March, the shares were trading around 18p each, with a market cap below £30m. It’s made a notable recovery in the past five months but is still far from its glory days.

So how did it get to this point, and what can investors learn from the story?

Boom and bust

Synthomer is a fairly simple business. It makes polymers for coatings, adhesives and, crucially, nitrile latex for medical and examination gloves. During the pandemic, that glove business was a goldmine, driving exceptional profits as hospitals and manufacturers scrambled for supply.

But in 2022, CEO Michael Willome said it was “significantly affected… by deteriorating macroeconomic conditions and the prolonged destocking in nitrile latex.”

Customers were heavily overstocked and it suddenly faced low volumes, weak pricing and poor plant utilisation.

At the same time, new acquisitions sent debt soaring from £114.2m to over £1,000m. With earnings down and leverage up, dividends were suspended in October (2022) as part of a deal with its banks.

The story flipped almost overnight from ‘growth and income’ to ‘deleveraging under pressure’, and the market reacted accordingly.

So what’s the lesson here for investors?

The Synthomer saga provides a few valuable lessons that could help investors make better decisions going forward:

• Don’t pay peak‑cycle prices for peak‑cycle earnings – especially in cyclical sectors.
• Large, debt‑funded acquisitions on the back of a rallying stock price can be a red flag.
• Never assume a dividend is safe if leverage is climbing and finance is being renegotiated.
• Look beyond the headlines to find out who really controls the supply and demand.

Most importantly, if you can’t get a clear understanding of how a company plans to deal with unexpected financial shocks, it may be better to avoid it.

A fragile recovery, but is it enough?

Fast‑forward to 2026 and a moderate recovery is in play, although I would still be cautious. Net debt has roughly halved to £500m since 2022, helped by a £276m rights issue, asset disposals, and improving cash flow.

The latest H1 2026 results show revenue up 6.7% to £954.3m and EBITDA up 16.4% to £96.7m, with margins improving to 10.1%. Analysts now sit around a consensus 12‑month target of roughly 130p — more of a Hold rather than a screaming buy.

It’s definitely heading in the right direction, so the shares may be worth considering at this price — but it’s not an obvious bargain. Financially and operationally the trajectory looks good, but leverage is still high and dividends remain suspended.

In my opinion, the real value here is the lessons we can take from it and use to improve our understanding of risk. That way, you’ll be better prepared for when the next boom creeps up and tries to suck you into the hype.

Should you invest £5,000 in Synthomer Plc right now?

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And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Synthomer Plc made the list?

Mark Hartley does not hold any positions in the companies mentioned.