Yahoo Finance Did You Manage To Avoid Esports Mogul's (ASX:ESH) Devastating 77% Share Price Drop?
It's not possible to invest over long periods without making some bad investments. But you want to avoid the really big losses like the plague. So consider, for a moment, the misfortune of Esports Mogul Limited (ASX:ESH) investors who have held the stock for three years as it declined a whopping 77%. That would certainly shake our confidence in the decision to own the stock. The more recent news is of little comfort, with the share price down 69% in a year. Shareholders have had an even rougher run lately, with the share price down 44% in the last 90 days. Of course, this share price action may well have been influenced by the 28% decline in the broader market, throughout the period.
Check out our latest analysis for Esports Mogul
Esports Mogul recorded just AU$86,991 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. You have to wonder why venture capitalists aren't funding it. 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 Esports Mogul will significantly advance the business plan before too long.
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 go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Some Esports Mogul investors have already had a taste of the bitterness stocks like this can leave in the mouth.
Esports Mogul had cash in excess of all liabilities of just AU$3.9m when it last reported (December 2019). So if it has not already moved to replenish reserves, we think the near-term chances of a capital raising event are pretty high. That probably explains why the share price is down 39% per year, over 3 years. The image below shows how Esports Mogul'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. Would it bother you if insiders were selling the stock? It would bother me, that's for sure. You can click here to see if there are insiders selling.
A Different Perspective
We regret to report that Esports Mogul shareholders are down 69% for the year. Unfortunately, that's worse than the broader market decline of 17%. 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 15% 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. It's always interesting to track share price performance over the longer term. But to understand Esports Mogul better, we need to consider many other factors. To that end, you should learn about the 7 warning signs we've spotted with Esports Mogul (including 4 which is are concerning) .
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 AU 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.
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. Thank you for reading.
