Investing in stocks comes with the risk that the share price will fall. And unfortunately for Alpine Immune Sciences, Inc. (NASDAQ:ALPN) shareholders, the stock is a lot lower today than it was a year ago. In that relatively short period, the share price has plunged 51%. Alpine Immune Sciences hasn’t been listed for long, so although we’re wary of recent listings that perform poorly, it may still prove itself with time. In contrast, the stock price has popped 8.3% in the last thirty days.
We don’t think Alpine Immune Sciences’s revenue of US$856,000 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. For example, they may be hoping that Alpine Immune Sciences comes up with a great new product, before it runs out of money.
Companies that lack both meaningful revenue and profits are usually considered high risk. You should be aware that there is always a chance that this sort of company will need to issue more shares to raise 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. Some Alpine Immune Sciences investors have already had a taste of the bitterness stocks like this can leave in the mouth.
When it reported in September 2019 Alpine Immune Sciences had minimal cash in excess of all liabilities consider its expenditure: just US$17m to be specific. So if it hasn’t remedied the situation already, it will almost certainly have to raise more capital soon. That probably explains why the share price is down 51% in the last year . You can see in the image below, how Alpine Immune Sciences’s cash levels have changed over time (click to see the values). The image below shows how Alpine Immune Sciences’s balance sheet has changed over time; if you want to see the precise values, simply click on the image.
It can be extremely risky to invest in a company that doesn’t even have revenue. There’s no way to know its value easily. Given that situation, would you be concerned if it turned out insiders were relentlessly selling stock? I would feel more nervous about the company if that were so. It costs nothing but a moment of your time to see if we are picking up on any insider selling.
A Different Perspective
While Alpine Immune Sciences shareholders are down 51% for the year, the market itself is up 9.0%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock flat over the last three months, the market now seems fairly ambivalent about the business. Given the relatively short history of this stock, we’d remain pretty wary until we see some strong business performance. It’s always interesting to track share price performance over the longer term. But to understand Alpine Immune Sciences better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We’ve identified 6 warning signs with Alpine Immune Sciences (at least 2 which are concerning) , and understanding them should be part of your investment process.
Of course Alpine Immune Sciences may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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