Taking the occasional loss comes part and parcel with investing on the stock market. Unfortunately, shareholders of AgeX Therapeutics, Inc. (NYSEMKT:AGE) have suffered share price declines over the last year. The share price has slid 65% in that time. AgeX Therapeutics may have better days ahead, of course; we've only looked at a one year period. Even worse, it's down 29% in about a month, which isn't fun at all.
We don't think AgeX Therapeutics's revenue of US$1,492,000 is enough to establish significant demand. This state of affairs suggests that venture capitalists won't provide funds on attractive terms. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. For example, they may be hoping that AgeX Therapeutics comes up with a great new product, before it runs out of money.
Companies that lack both meaningful revenue and profits are usually considered 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. So the share price itself impacts the value of the shares (as it determines the cost of capital). 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 AgeX Therapeutics investors have already had a taste of the bitterness stocks like this can leave in the mouth.
AgeX Therapeutics had cash in excess of all liabilities of just US$528k when it last reported (September 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 65% in the last year . The image below shows how AgeX Therapeutics's balance sheet has changed over time; if you want to see the precise values, simply click on the image. You can click on the image below to see (in greater detail) how AgeX Therapeutics'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? 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
Given that the market gained 24% in the last year, AgeX Therapeutics shareholders might be miffed that they lost 65%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. The share price decline has continued throughout the most recent three months, down 6.9%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 7 warning signs for AgeX Therapeutics (2 are a bit unpleasant!) that you should be aware of before investing here.
We will like AgeX Therapeutics 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 US exchanges.
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