The Ausmex Mining Group (ASX:AMG) Share Price Is Down 72% So Some Shareholders Are Rather Upset

The art and science of stock market investing requires a tolerance for losing money on some of the shares you buy. But it should be a priority to avoid stomach churning catastrophes, wherever possible. So spare a thought for the long term shareholders of Ausmex Mining Group Limited (ASX:AMG); the share price is down a whopping 72% in the last twelve months. That'd be enough to make even the strongest stomachs churn. Because Ausmex Mining Group hasn't been listed for many years, the market is still learning about how the business performs. The falls have accelerated recently, with the share price down 53% in the last three months. But this could be related to the weak market, which is down 22% in the same period.

View our latest analysis for Ausmex Mining Group

With just AU$1,234,133 worth of revenue in twelve months, we don't think the market considers Ausmex Mining Group to have proven its business plan. 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 Ausmex Mining Group will find or develop a valuable new mine before too long.

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 such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Ausmex Mining Group has already given some investors a taste of the bitter losses that high risk investing can cause.

Ausmex Mining Group had cash in excess of all liabilities of just AU$857k when it last reported (June 2019). So if it hasn't remedied the situation already, it will almost certainly have to raise more capital soon. With that in mind, you can understand why the share price dropped 72% in the last year . You can click on the image below to see (in greater detail) how Ausmex Mining Group's cash levels have changed over time. The image below shows how Ausmex Mining Group'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? It would bother me, that's for sure. You can click here to see if there are insiders selling.

A Different Perspective

Ausmex Mining Group shareholders are down 72% for the year, even worse than the market loss of 12%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. The share price decline has continued throughout the most recent three months, down 53%, suggesting an absence of enthusiasm from investors. 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 Ausmex Mining Group better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 7 warning signs with Ausmex Mining Group (at least 3 which can't be ignored) , and understanding them should be part of your investment process.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.