It’s not a secret that every investor will make bad investments, from time to time. But it should be a priority to avoid stomach churning catastrophes, wherever possible. So we hope that those who held Quantify Technology Holdings Limited (ASX:QFY) during the last year don’t lose the lesson, in addition to the 78% hit to the value of their shares. That’d be a striking reminder about the importance of diversification. Quantify Technology Holdings may have better days ahead, of course; we’ve only looked at a one year period. Furthermore, it’s down 64% in about a quarter. That’s not much fun for holders. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.
We don’t think Quantify Technology Holdings’s revenue of AU$485,509 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. Investors will be hoping that Quantify Technology Holdings can make progress and gain better traction for the business, before it runs low on cash.
Companies that lack both meaningful revenue and profits are usually considered high risk. There is almost always a chance they will need to raise more capital, and their progress – and share price – will dictate how dilutive that is to current holders. 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. It certainly is a dangerous place to invest, as Quantify Technology Holdings investors might realise.
Quantify Technology Holdings had liabilities exceeding cash by AU$1.4m when it last reported in December 2019, according to our data. That puts it in the highest risk category, according to our analysis. But with the share price diving 78% in the last year , it’s probably fair to say that some shareholders no longer believe the company will succeed. You can click on the image below to see (in greater detail) how Quantify Technology Holdings’s cash levels have changed over time. You can click on the image below to see (in greater detail) how Quantify Technology Holdings’s cash levels have changed over time.
Of course, the truth is that it is hard to value companies without much revenue or profit. Would it bother you if insiders were selling the 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
Given that the market gained 7.2% in the last year, Quantify Technology Holdings shareholders might be miffed that they lost 78%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock down 64% over the last three months, the market doesn’t seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we’d remain pretty wary until we see some strong business performance. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that Quantify Technology Holdings is showing 7 warning signs in our investment analysis , and 4 of those shouldn’t be ignored…
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 AU exchanges.
If you spot an error that warrants correction, please contact the editor at email@example.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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