If you like investing in stocks, there’s no denying that buying stop-loss stocks is great, but the last three years have been particularly tough over the long term. Invex Therapeutics (ASX:IXC) shareholders, unfortunately the share price has fallen 88% during this period. For those of you who have weathered this price crash, I urge you to have a diversified portfolio, so even if you incur losses, the lesson is not lost.
Shareholders have been declining over the long term, so let’s look at the underlying fundamentals over that period to see if that is consistent with the returns.
Check out our latest analysis for Invex Therapeutics
Invex Therapeutics’ revenues of AUD$12,175 are unlikely to be enough to establish significant demand. One can’t help but wonder why they listed so early. Are venture capitalists not interested? Rather than focusing on current revenues (or lack thereof), investors appear to be more focused on future potential. Some shareholders appear to believe Invex Therapeutics will soon make significant progress on its business plans.
Generally, if a company doesn’t have much revenue and is in the red, it’s a risky investment. In most cases, a capital raise may be required, and the company’s progress and the stock price will determine how dilutive it will be for current shareholders. Some such companies will grow revenue, make profits, and create value, while others will eventually go bankrupt after being hyped by hopeful amateurs. Invex Therapeutics has already given some investors a taste of the bitter losses that risky investments can cause.
Invex Therapeutics had just AU$5.2m in cash in excess of its total liabilities when it last reported (December 2023). So it will almost certainly have to raise more capital soon if it hasn’t turned its situation around already. With that in mind, it’s easy to understand why the share price has fallen 23% per year over three years. The image below shows how Invex Therapeutics’ balance sheet has changed over time. If you want to see the exact values, just click on the image.
Of course, the truth is that it’s hard to value a company without much revenue or profit. In that situation, would it be concerning if insiders were relentlessly selling shares? If so, it would make you feel even more uneasy about the company. You can see if insiders have been selling by clicking here.
What about the total shareholder return (TSR)?
Invex Therapeutics Total shareholder return (TSR) and its Price Earnings RatioThe TSR is a return calculation which 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. Although Invex Therapeutics doesn’t pay a dividend, its TSR of -52% exceeds the share price return of -88%, implying that it has either spun off businesses or raised discounted capital, thereby providing additional value to shareholders.
A different perspective
Over the past year, Invex Therapeutics shareholders have lost 17%. In comparison, the market has gained around 13%. Keep in mind, however, that even the best stocks can underperform the market over a twelve month period. However, the loss over the past year is not as bad as the 15% annual loss suffered by investors over the past three years. We need clear information to suggest that the company will grow before we take the view that the share price will stabilize. While it is well worth considering the different impacts that market conditions can have on the share price, there are some factors that are even more important. These include: 4 warning signs for Invex Therapeutics You should know.
Invex Therapeutics isn’t the only stock that insiders are buying. Let’s take a look. free A list of attractively valuated small-cap companies 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 Australian exchanges.
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This article by Simply Wall St is general in nature. We use only unbiased methodologies to provide commentary based on historical data and analyst forecasts, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks, and does not take into account your objectives, or your financial situation. We seek to provide long-term focused analysis driven by fundamental data. Note that our analysis may not take into account the latest price sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.
