Yahoo Finance Imagine Owning Mount Burgess Mining (ASX:MTB) While The Price Tanked 56%
Investing in stocks comes with the risk that the share price will fall. And unfortunately for Mount Burgess Mining N.L. (ASX:MTB) shareholders, the stock is a lot lower today than it was a year ago. In that relatively short period, the share price has plunged 56%. Notably, shareholders had a tough run over the longer term, too, with a drop of 50% in the last three years. The good news is that the stock is up 33% in the last week.
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Check out our latest analysis for Mount Burgess Mining
We don't think Mount Burgess Mining's revenue of AU$20,109 is enough to establish significant demand. We can't help wondering why it's publicly listed so early in its journey. Are venture capitalists not interested? 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 Mount Burgess Mining finds some valuable resources, before it runs out of money.
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 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). Mount Burgess Mining has already given some investors a taste of the bitter losses that high risk investing can cause.
Our data indicates that Mount Burgess Mining had AU$3,505,983 more in total liabilities than it had cash, when it last reported in December 2018. That puts it in the highest risk category, according to our analysis. But since the share price has dived -56% in the last year, it looks like some investors think it's time to abandon ship, so to speak. The image below shows how Mount Burgess Mining'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
Investors in Mount Burgess Mining had a tough year, with a total loss of 56%, against a market gain of about 11%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 11% over the last half decade. 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. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
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.
