Long term investing works well, but it doesn’t always work for each individual stock. We don’t wish catastrophic capital loss on anyone. Anyone who held Bioasis Technologies Inc. (CVE:BTI) for five years would be nursing their metaphorical wounds since the share price dropped 88% in that time. We also note that the stock has performed poorly over the last year, with the share price down 58%. Unfortunately the share price momentum is still quite negative, with prices down 36% in thirty days. However, we note the price may have been impacted by the broader market, which is down 19% in the same time period.
We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don’t have to lose the lesson.
With just CA$718,475 worth of revenue in twelve months, we don’t think the market considers Bioasis Technologies to have proven its business plan. We can’t help wondering why it’s publicly listed so early in its journey. Are venture capitalists not interested? As a result, we think it’s unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. For example, they may be hoping that Bioasis Technologies comes up with a great new product, before it runs out of money.
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 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 such companies do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized). Some Bioasis Technologies investors have already had a taste of the bitterness stocks like this can leave in the mouth.
Bioasis Technologies had liabilities exceeding cash by CA$2.2m when it last reported in November 2019, according to our data. That makes it extremely high risk, in our view. But since the share price has dived -34% per year, over 5 years , it looks like some investors think it’s time to abandon ship, so to speak. You can click on the image below to see (in greater detail) how Bioasis Technologies’s cash levels have changed over time.
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. What if insiders are ditching the stock hand over fist? It would bother me, that’s for sure. It only takes a moment for you to check whether we have identified any insider sales recently.
A Different Perspective
We regret to report that Bioasis Technologies shareholders are down 58% for the year. Unfortunately, that’s worse than the broader market decline of 22%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there’s a good opportunity. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 34% 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we’ve discovered 5 warning signs for Bioasis Technologies (4 don’t sit too well with us!) that you should be aware of before investing here.
If you are like me, then you will 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 CA exchanges.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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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