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Some Anglo African Oil & Gas (LON:AAOG) Shareholders Have Copped A Big 68% Share Price Drop

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Simply Wall St
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The nature of investing is that you win some, and you lose some. And unfortunately for Anglo African Oil & Gas plc (LON:AAOG) shareholders, the stock is a lot lower today than it was a year ago. To wit the share price is down 68% in that time. Anglo African Oil & Gas may have better days ahead, of course; we've only looked at a one year period. Shareholders have had an even rougher run lately, with the share price down 58% in the last 90 days.

See our latest analysis for Anglo African Oil & Gas

With just UK£133,503 worth of revenue in twelve months, we don't think the market considers Anglo African Oil & Gas to have proven its business plan. This state of affairs suggests that venture capitalists won't provide funds on attractive terms. 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 Anglo African Oil & Gas will discover or develop fossil fuel before too long.

As a general rule, if a company doesn't have much revenue, and it loses money, then it is a high risk investment. There is almost always a chance they will need to raise more capital, and their progress - and share price - will dictate how dilutive that is to current holders. While some companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. It certainly is a dangerous place to invest, as Anglo African Oil & Gas investors might realise.

Anglo African Oil & Gas had liabilities exceeding cash by UK£8,705,322 when it last reported in December 2018, according to our data. That makes it extremely high risk, in our view. But since the share price has dived -68% in the last year, it looks like some investors think it's time to abandon ship, so to speak. You can see in the image below, how Anglo African Oil & Gas's cash levels have changed over time (click to see the values). You can click on the image below to see (in greater detail) how Anglo African Oil & Gas's cash levels have changed over time.

AIM:AAOG Historical Debt, September 3rd 2019
AIM:AAOG Historical Debt, September 3rd 2019

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. What if insiders are ditching the stock hand over fist? I'd like that just about as much as I like to drink milk and fruit juice mixed together. It only takes a moment for you to check whether we have identified any insider sales recently.

A Different Perspective

While Anglo African Oil & Gas shareholders are down 68% for the year, the market itself is up 1.1%. 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 58%, 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. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.

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 GB 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.