Yahoo Finance Did Changing Sentiment Drive Grizzly Discoveries's (CVE:GZD) Share Price Down By 50%?
Grizzly Discoveries Inc (CVE:GZD) shareholders should be happy to see the share price up 29% in the last month. But in truth the last year hasn't been good for the share price. After all, the share price is down 50% in the last year, significantly under-performing the market.
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
View our latest analysis for Grizzly Discoveries
With zero revenue generated over twelve months, we don't think that Grizzly Discoveries has proved its business plan yet. 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. It seems likely some shareholders believe that Grizzly Discoveries will find or develop a valuable new mine before too long.
Companies that lack both meaningful revenue and profits are usually considered high risk. There is almost always a chance they will need to raise more capital, and their progress - and share price - will dictate how dilutive that is to current holders. While some such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt.
Our data indicates that Grizzly Discoveries had CA$223,635 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 since the share price has dived -50% in the last year, it looks like some investors think it's time to abandon ship, so to speak. You can see in the image below, how Grizzly Discoveries'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. 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.
A Different Perspective
Investors in Grizzly Discoveries had a tough year, with a total loss of 50%, against a market gain of about 1.5%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 5.6% over the last half decade. We realise that Buffett has said investors should 'buy when there is blood on the streets', but we caution that investors should first be sure they are buying a high quality businesses. Before spending more time on Grizzly Discoveries it might be wise to click here to see if insiders have been buying or selling shares.
Of course Grizzly Discoveries may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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.
