Yahoo Finance Did You Manage To Avoid Alphinat's (CVE:NPA) Painful 61% Share Price Drop?
Statistically speaking, long term investing is a profitable endeavour. But that doesn't mean long term investors can avoid big losses. For example, after five long years the Alphinat Inc. (CVE:NPA) share price is a whole 61% lower. That's an unpleasant experience for long term holders. And we doubt long term believers are the only worried holders, since the stock price has declined 22% over the last twelve months. On top of that, the share price has dropped a further 30% in a month. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.
Check out our latest analysis for Alphinat
With just CA$1,075,825 worth of revenue in twelve months, we don't think the market considers Alphinat to have proven its business plan. 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 Alphinat will significantly advance the business plan before too long.
Companies that lack both meaningful revenue and profits are usually considered high risk. 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 such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. It certainly is a dangerous place to invest, as Alphinat investors might realise.
Our data indicates that Alphinat had CA$1,830,237 more in total liabilities than it had cash, when it last reported in May 2019. That puts it in the highest risk category, according to our analysis. But since the share price has dived -17% per year, over 5 years, it looks like some investors think it's time to abandon ship, so to speak. You can click on the image below to see (in greater detail) how Alphinat's cash levels have changed over time. The image below shows how Alphinat'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. What if insiders are ditching the stock hand over fist? It would bother me, that's for sure. You can click here to see if there are insiders selling.
A Different Perspective
While the broader market lost about 0.08% in the twelve months, Alphinat shareholders did even worse, losing 22%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 17% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. If you would like to research Alphinat in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
But note: Alphinat may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
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.
