Stock Analysis

Investors one-year losses grow to 72% as the stock sheds zł566k this past week

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WSE:TGS
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As every investor would know, you don't hit a homerun every time you swing. But serious investors should think long and hard about avoiding extreme losses. We wouldn't blame True Games Syndicate S.A. (WSE:TGS) shareholders if they were still in shock after the stock dropped like a lead balloon, down 83% in just one year. While some investors are willing to stomach this sort of loss, they are usually professionals who spread their bets thinly. The silver lining (for longer term investors) is that the stock is still 78% higher than it was three years ago. The falls have accelerated recently, with the share price down 58% in the last three months. While a drop like that is definitely a body blow, money isn't as important as health and happiness.

Since True Games Syndicate has shed zł566k from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for True Games Syndicate

True Games Syndicate hasn't yet reported any revenue, so it's as much a business idea as an actual business. 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. Investors will be hoping that True Games Syndicate can make progress and gain better traction for the business, before it runs low on cash.

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 True Games Syndicate investors have already had a taste of the bitterness stocks like this can leave in the mouth.

True Games Syndicate had liabilities exceeding cash by zł1.6m when it last reported in June 2022, according to our data. That makes it extremely high risk, in our view. But with the share price diving 83% in the last year , it's probably fair to say that some shareholders no longer believe the company will succeed. You can see in the image below, how True Games Syndicate's cash levels have changed over time (click to see the values).

debt-equity-history-analysis
WSE:TGS Debt to Equity History October 5th 2022

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. Would it bother you if insiders were selling the stock? I would feel more nervous about the company if that were so. You can click here to see if there are insiders selling.

What About The Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between True Games Syndicate's total shareholder return (TSR) and its share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. True Games Syndicate hasn't been paying dividends, but its TSR of -72% exceeds its share price return of -83%, implying it has either spun-off a business, or raised capital at a discount; thereby providing additional value to shareholders.

A Different Perspective

We regret to report that True Games Syndicate shareholders are down 72% for the year. Unfortunately, that's worse than the broader market decline of 32%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Longer term investors wouldn't be so upset, since they would have made 11%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand True Games Syndicate better, we need to consider many other factors. For instance, we've identified 6 warning signs for True Games Syndicate that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on PL exchanges.

Valuation is complex, but we're helping make it simple.

Find out whether True Games Syndicate is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About WSE:TGS

True Games Syndicate

True Games Syndicate S.A. primarily focuses on the distribution and sale of dietary supplements and cosmetics, medical devices, and veterinary products in Poland.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation2
Future Growth0
Past Performance0
Financial Health3
Dividends0

Read more about these checks in the individual report sections or in our analysis model.

Mediocre balance sheet and slightly overvalued.