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It’s nice to see the Bellicum Pharmaceuticals, Inc. (NASDAQ:BLCM) share price up 14% in a week. But that is meagre solace in the face of the shocking decline over three years. In that time the share price has melted like a snowball in the desert, down 85%. So it sure is nice to see a big of an improvement. Of course the real question is whether the business can sustain a turnaround.
While a drop like that is definitely a body blow, money isn’t as important as health and happiness.
With just US$1,482,000 worth of revenue in twelve months, we don’t think the market considers Bellicum Pharmaceuticals to have proven its business plan. You have to wonder why venture capitalists aren’t funding it. 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. For example, they may be hoping that Bellicum Pharmaceuticals comes up with a great new treatment, before it runs out of money.
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 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 Bellicum Pharmaceuticals investors might realise.
When it reported in March 2019 Bellicum Pharmaceuticals had minimal cash in excess of all liabilities consider its expenditure: just US$16m to be specific. 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 47% per year, over 3 years. You can see in the image below, how Bellicum Pharmaceuticals’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. 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
Over the last year, Bellicum Pharmaceuticals shareholders took a loss of 81%. In contrast the market gained about 2.8%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. The three-year loss of 47% per year isn’t as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Warren Buffett famously said he likes to ‘buy when there is blood on the streets’, he also focusses on high quality stocks with solid prospects. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.