Yahoo Finance Such Is Life: How Cielo Waste Solutions (CSE:CMC) Shareholders Saw Their Shares Drop 69%
The truth is that if you invest for long enough, you're going to end up with some losing stocks. But long term Cielo Waste Solutions Corp. (CSE:CMC) shareholders have had a particularly rough ride in the last three year. Unfortunately, they have held through a 69% decline in the share price in that time. The more recent news is of little comfort, with the share price down 50% in a year. Shareholders have had an even rougher run lately, with the share price down 58% in the last 90 days.
See our latest analysis for Cielo Waste Solutions
Cielo Waste Solutions recorded just CA$3,000 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. We can't help wondering why it's publicly listed so early in its journey. Are venture capitalists not interested? So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. It seems likely some shareholders believe that Cielo Waste Solutions will significantly advance the business plan before too long.
We think companies that have neither significant revenues nor profits are pretty high risk. There was already a significant chance that they would need more money for business development, and indeed they recently put themselves at the mercy of capital markets and raised equity. 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. Cielo Waste Solutions has already given some investors a taste of the bitter losses that high risk investing can cause.
Our data indicates that Cielo Waste Solutions had more in total liabilities than it had cash, when it last reported. That made it extremely high risk, in our view. But since the share price has dived -32% per year, over 3 years , it looks like some investors think it's time to abandon ship, so to speak, even though the cash reserves look a little better with the capital raising. You can see in the image below, how Cielo Waste Solutions's cash levels have changed over time (click to see the values).
It can be extremely risky to invest in a company that doesn't even have revenue. There's no way to know its value easily. Given that situation, would you be concerned if it turned out insiders were relentlessly selling stock? I'd like that just about as much as I like to drink milk and fruit juice mixed together. It only takes a moment for you to check whether we have identified any insider sales recently.
A Different Perspective
Cielo Waste Solutions shareholders are down 50% for the year, falling short of the market return. The market shed around 11%, no doubt weighing on the stock price. The three-year loss of 32% 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. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we've discovered 6 warning signs for Cielo Waste Solutions (3 shouldn't be ignored!) that you should be aware of before investing here.
Cielo Waste Solutions is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.
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.
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