Yahoo Finance Such Is Life: How Norvista Capital (CVE:NVV) Shareholders Saw Their Shares Drop 52%
The truth is that if you invest for long enough, you're going to end up with some losing stocks. But long term Norvista Capital Corporation (CVE:NVV) shareholders have had a particularly rough ride in the last three year. Regrettably, they have had to cope with a 52% drop in the share price over that period.
Check out our latest analysis for Norvista Capital
Norvista Capital recorded just CA$92,934 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. 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. For example, investors may be hoping that Norvista Capital finds some valuable resources, before it runs out of money.
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. Norvista Capital has already given some investors a taste of the bitter losses that high risk investing can cause.
When it last reported its balance sheet in September 2019, Norvista Capital could boast a strong position, with cash in excess of all liabilities of CA$9.2m. This gives management the flexibility to drive business growth, without worrying too much about cash reserves. But since the share price has dropped 21% per year, over 3 years , it seems like the market might have been over-excited previously. You can click on the image below to see (in greater detail) how Norvista Capital's cash levels have changed over time. The image below shows how Norvista Capital'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. It costs nothing but a moment of your time to see if we are picking up on any insider selling.
A Different Perspective
It's good to see that Norvista Capital has rewarded shareholders with a total shareholder return of 14% in the last twelve months. Notably the five-year annualised TSR loss of 6.2% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example - Norvista Capital has 3 warning signs (and 2 which don't sit too well with us) we think you should know about.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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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