Yahoo Finance Cokal (ASX:CKA investor one-year losses grow to 53% as the stock sheds AU$22m this past week
The nature of investing is that you win some, and you lose some. Anyone who held Cokal Limited (ASX:CKA) over the last year knows what a loser feels like. To wit the share price is down 53% in that time. On the bright side, the stock is actually up 12% in the last three years. Furthermore, it's down 38% in about a quarter. That's not much fun for holders. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.
With the stock having lost 21% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.
Check out our latest analysis for Cokal
With just US$2,536,874 worth of revenue in twelve months, we don't think the market considers Cokal 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). For example, investors may be hoping that Cokal finds some valuable resources, before it runs out of money.
We think companies that have neither significant revenues nor profits are pretty 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 to raise 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. Some Cokal investors have already had a taste of the bitterness stocks like this can leave in the mouth.
Our data indicates that Cokal had US$44m more in total liabilities than it had cash, when it last reported in December 2023. That puts it in the highest risk category, according to our analysis. But with the share price diving 53% in the last year , it's probably fair to say that some shareholders no longer believe the company will succeed. The image below shows how Cokal's balance sheet has changed over time; if you want to see the precise values, simply click on the image.
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. Would it bother you if insiders were selling the stock? 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
Cokal shareholders are down 53% for the year, but the market itself is up 15%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn't be so upset, since they would have made 2%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. To that end, you should learn about the 5 warning signs we've spotted with Cokal (including 3 which are a bit concerning) .
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 Australian exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
