It is a pleasure to report that the MYOS RENS Technology Inc. (NASDAQ:MYOS) is up 32% in the last quarter. But will that repair the damage for the weary investors who have owned this stock as it declined over half a decade? Probably not. Like a ship taking on water, the share price has sunk 88% in that time. The recent bounce might mean the long decline is over, but we are not confident. The million dollar question is whether the company can justify a long term recovery.
While a drop like that is definitely a body blow, money isn’t as important as health and happiness.
MYOS RENS Technology recorded just US$518,000 in revenue over the last twelve months, which isn’t really enough for us to consider it to have a proven product. This state of affairs suggests that venture capitalists won’t provide funds on attractive terms. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). It seems likely some shareholders believe that MYOS RENS Technology will significantly advance the business plan before too long.
As a general rule, if a company doesn’t have much revenue, and it loses money, then it is a high risk investment. There is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets. So the share price itself impacts the value of the shares (as it determines the cost of capital). 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. Some MYOS RENS Technology investors have already had a taste of the bitterness stocks like this can leave in the mouth.
MYOS RENS Technology had liabilities exceeding cash by US$107,000 when it last reported in June 2019, according to our data. That puts it in the highest risk category, according to our analysis. But since the share price has dived -35% per year, over 5 years, it looks like some investors think it’s time to abandon ship, so to speak. You can see in the image below, how MYOS RENS Technology’s cash levels have changed over time (click to see the values).
Of course, the truth is that it is hard to value companies without much revenue or profit. 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
It’s good to see that MYOS RENS Technology has rewarded shareholders with a total shareholder return of 28% in the last twelve months. Notably the five-year annualised TSR loss of 35% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of MYOS RENS Technology by clicking this link.
MYOS RENS Technology is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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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. Thank you for reading.