Yahoo Finance Should Emerge Gaming (ASX:EM1) Be Disappointed With Their 50% Profit?
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It hasn't been the best quarter for Emerge Gaming Limited (ASX:EM1) shareholders, since the share price has fallen 30% in that time. But that doesn't change the reality that over twelve months the stock has done really well. After all, the share price is up a market-beating 50% in that time.
See our latest analysis for Emerge Gaming
With just AU$128,465 worth of revenue in twelve months, we don't think the market considers Emerge Gaming to have proven its business plan. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. Investors will be hoping that Emerge Gaming can make progress and gain better traction for the business, before it runs low on cash.
As a general rule, if a company doesn't have much revenue, and it loses money, then it is a high risk investment. 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).
Emerge Gaming had cash in excess of all liabilities of AU$2.1m when it last reported (December 2018). While that's nothing to panic about, there is some possibility the company will raise more capital, especially if profits are not imminent. Given the share price has increased by a solid 50% in the last year, its fair to say investors remain excited about the future, despite the potential need for cash. You can see in the image below, how Emerge Gaming's cash levels have changed over time (click to see the values). You can see in the image below, how Emerge Gaming's cash levels have changed over time (click to see the values).
In reality it's hard to have much certainty when valuing a business that has neither revenue or profit. One thing you can do is check if company insiders are buying shares. If they are buying a significant amount of shares, that's certainly a good thing. Luckily we are in a position to provide you with this free chart of insider buying (and selling).
A Different Perspective
Emerge Gaming shareholders should be happy with the total gain of 50% over the last twelve months. Unfortunately the share price is down 30% over the last quarter. Shorter term share price moves often don't signify much about the business itself. You could get a better understanding of Emerge Gaming's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
We will like Emerge Gaming better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU 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 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. Thank you for reading.
