Yahoo Finance Did Changing Sentiment Drive Firebird Resources's (CVE:FIX) Share Price Down A Worrying 57%?
If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But the long term shareholders of Firebird Resources Inc. (CVE:FIX) have had an unfortunate run in the last three years. Regrettably, they have had to cope with a 57% drop in the share price over that period. And the ride hasn't got any smoother in recent times over the last year, with the price 57% lower in that time. The falls have accelerated recently, with the share price down 40% in the last three months.
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See our latest analysis for Firebird Resources
With zero revenue generated over twelve months, we don't think that Firebird Resources has proved its business plan yet. This state of affairs suggests that venture capitalists won't provide funds on attractive terms. 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. It seems likely some shareholders believe that Firebird Resources will find or develop a valuable new mine before too long.
We think companies that have neither significant revenues nor profits are pretty high risk. 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 Firebird Resources investors have already had a taste of the bitterness stocks like this can leave in the mouth.
Our data indicates that Firebird Resources had CA$1,987,433 more in total liabilities than it had cash, when it last reported in January 2019. That makes it extremely high risk, in our view. But with the share price diving 25% per year, over 3 years, it's probably fair to say that some shareholders no longer believe the company will succeed. The image below shows how Firebird Resources's balance sheet has changed over time; if you want to see the precise values, simply click on the image.
In reality it's hard to have much certainty when valuing a business that has neither revenue or profit. Would it bother you if insiders were selling the stock? I would feel more nervous about the company if that were so. It costs nothing but a moment of your time to see if we are picking up on any insider selling.
A Different Perspective
Firebird Resources shareholders are down 57% for the year, but the market itself is up 1.6%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 8.4% per year over half a decade. 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. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
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 CA 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 editorial-team@simplywallst.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.
