It’s not possible to invest over long periods without making some bad investments. But you want to avoid the really big losses like the plague. So take a moment to sympathize with the long term shareholders of Matinas BioPharma Holdings, Inc. (NYSEMKT:MTNB), who have seen the share price tank a massive 82% over a three year period. That might cause some serious doubts about the merits of the initial decision to buy the stock, to put it mildly. And more recent buyers are having a tough time too, with a drop of 47% in the last year. The falls have accelerated recently, with the share price down 72% in the last three months.
While a drop like that is definitely a body blow, money isn’t as important as health and happiness.
Check out our latest analysis for Matinas BioPharma Holdings
We don’t think Matinas BioPharma Holdings’s revenue of US$89,812 is enough to establish significant demand. You have to wonder why venture capitalists aren’t funding it. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. It seems likely some shareholders believe that Matinas BioPharma Holdings has the funding to invent a new product before too long.
As a general rule, if a company doesn’t have much revenue, and it loses money, then it is a high risk investment. You should be aware that the company needed to issue more shares recently so that it could raise enough money to continue pursuing its business plan. While some companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. Matinas BioPharma Holdings has already given some investors a taste of the bitter losses that high risk investing can cause.
Matinas BioPharma Holdings had cash in excess of all liabilities of when it last reported. While that’s nothing to panic about, the company did raise more capital recently, bolstering the balance sheet since profits are not yet a reality. With the share price down 43% per year, over 3 years , it seems likely that the additional cash is not out-weighing other issues on investors’ minds. The image below shows how Matinas BioPharma Holdings’s balance sheet has changed over time; if you want to see the precise values, simply click on the image.
In reality it’s hard to have much certainty when valuing a business that has neither revenue or profit. Given that situation, would you be concerned if it turned out insiders were relentlessly selling stock? I’d like that just about as much as I like to drink milk and fruit juice mixed together. It costs nothing but a moment of your time to see if we are picking up on any insider selling.
A Different Perspective
While the broader market lost about 8.1% in the twelve months, Matinas BioPharma Holdings shareholders did even worse, losing 47%. Having said that, it’s inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 12% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It’s always interesting to track share price performance over the longer term. But to understand Matinas BioPharma Holdings better, we need to consider many other factors. Take risks, for example – Matinas BioPharma Holdings has 4 warning signs (and 1 which is concerning) we think you should know about.
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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