AbClon (KOSDAQ:174900) shareholders are up 11% this past week, but still in the red over the last five years

It's nice to see the AbClon Inc. (KOSDAQ:174900) share price up 11% in a week. But if you look at the last five years the returns have not been good. In fact, the share price is down 21%, which falls well short of the return you could get by buying an index fund.

The recent uptick of 11% could be a positive sign of things to come, so let's take a look at historical fundamentals.

See our latest analysis for AbClon

We don't think AbClon's revenue of ₩2,277,446,300 is enough to establish significant demand. You have to wonder why venture capitalists aren't funding it. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). For example, they may be hoping that AbClon comes up with a great new product, before it runs out of money.

We think companies that have neither significant revenues nor profits are pretty 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 such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt.

AbClon had liabilities exceeding cash by ₩1.8b when it last reported in June 2024, according to our data. That makes it extremely high risk, in our view. But since the share price has dived 5% per year, over 5 years , it looks like some investors think it's time to abandon ship, so to speak. The image below shows how AbClon'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. What if insiders are ditching the stock hand over fist? I would feel more nervous about the company if that were so. It only takes a moment for you to check whether we have identified any insider sales recently.

A Different Perspective

It's good to see that AbClon has rewarded shareholders with a total shareholder return of 19% in the last twelve months. There's no doubt those recent returns are much better than the TSR loss of 4% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand AbClon better, we need to consider many other factors. For example, we've discovered 5 warning signs for AbClon (2 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 undervalued small caps 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 South Korean exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.