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If you love investing in stocks you're bound to buy some losers. But the last three years have been particularly tough on longer term Graphene 3D Lab Inc. (CVE:GGG) shareholders. Sadly for them, the share price is down 61% in that time. The more recent news is of little comfort, with the share price down 46% in a year. Unfortunately the share price momentum is still quite negative, with prices down 12% in thirty days.
With just US$969,667 worth of revenue in twelve months, we don't think the market considers Graphene 3D Lab to have proven its business plan. 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. Investors will be hoping that Graphene 3D Lab can make progress and gain better traction for the business, before it runs low on cash.
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 Graphene 3D Lab investors have already had a taste of the bitterness stocks like this can leave in the mouth.
Graphene 3D Lab had liabilities exceeding cash by US$177,227 when it last reported in February 2019, according to our data. That makes it extremely high risk, in our view. But since the share price has dived -27% per year, over 3 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 Graphene 3D Lab's cash levels have changed over time. The image below shows how Graphene 3D Lab's balance sheet has changed over time; if you want to see the precise values, simply click on the image.
Of course, the truth is that it is hard to value companies without much revenue or profit. What if insiders are ditching the stock hand over fist? I'd like that just about as much as I like to drink milk and fruit juice mixed together. It costs nothing but a moment of your time to see if we are picking up on any insider selling.
A Different Perspective
The last twelve months weren't great for Graphene 3D Lab shares, which cost holders 46%, while the market was up about 1.1%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The three-year loss of 27% 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. Although Warren Buffett famously said he likes to 'buy when there is blood on the streets', he also focusses on high quality stocks with solid prospects. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares - and the price they paid.
Graphene 3D Lab is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
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 firstname.lastname@example.org. 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.