Yahoo Finance If You Had Bought Exore Resources (ASX:ERX) Stock Three Years Ago, You'd Be Sitting On A 64% Loss, Today
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Exore Resources Ltd (ASX:ERX) shareholders should be happy to see the share price up 29% in the last quarter. Meanwhile over the last three years the stock has dropped hard. Indeed, the share price is down a tragic 64% in the last three years. Some might say the recent bounce is to be expected after such a bad drop. Perhaps the company has turned over a new leaf.
See our latest analysis for Exore Resources
Exore Resources didn't have any revenue in the last year, so it's fair to say it doesn't yet have a proven product (or at least not one people are paying for). We can't help wondering why it's publicly listed so early in its journey. Are venture capitalists not interested? 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. It seems likely some shareholders believe that Exore Resources will find or develop a valuable new mine before too long.
Companies that lack both meaningful revenue and profits are usually considered 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 Exore Resources investors have already had a taste of the bitterness stocks like this can leave in the mouth.
When it last reported its balance sheet in December 2018, Exore Resources could boast a strong position, with net cash of AU$14m. That allows management to focus on growing the business, and not worry too much about raising capital. But since the share price has dropped 29% 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 Exore Resources's cash levels have changed over time.
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. Given that situation, would you be concerned if it turned out insiders were relentlessly selling stock? It would bother me, that's for sure. It only takes a moment for you to check whether we have identified any insider sales recently.
A Different Perspective
We're pleased to report that Exore Resources shareholders have received a total shareholder return of 60% over one year. Notably the five-year annualised TSR loss of 4.4% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. If you would like to research Exore Resources in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
If you are like me, then you will not want to miss this free list of growing companies that insiders are 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.
