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The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! For example, the VBI Vaccines Inc. (NASDAQ:VBIV) share price had more than doubled in just one year - up 148%. Also pleasing for shareholders was the 36% gain in the last three months. On the other hand, longer term shareholders have had a tougher run, with the stock falling 5.1% in three years.
We don't think VBI Vaccines' revenue of US$1,471,000 is enough to establish significant demand. 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. For example, they may be hoping that VBI Vaccines comes up with a great new product, before it runs out of money.
We think companies that have neither significant revenues nor profits are pretty high risk. 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 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). Of course, if you time it right, high risk investments like this can really pay off, as VBI Vaccines investors might know.
VBI Vaccines had cash in excess of all liabilities of US$87m when it last reported (September 2020). While that's nothing to panic about, there is some possibility the company will raise more capital, especially if profits are not imminent. With the share price up 85% in the last year , the market is seems hopeful about the potential, despite the cash burn. The image below shows how VBI Vaccines' balance sheet has changed over time; if you want to see the precise values, simply click on the image.
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, many of the best investors like to check if insiders have been buying shares. It's usually a positive if they have, as it may indicate they see value in the stock. Luckily we are in a position to provide you with this free chart of insider buying (and selling).
A Different Perspective
We're pleased to report that VBI Vaccines shareholders have received a total shareholder return of 148% over one year. That certainly beats the loss of about 1.0% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. 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. To that end, you should be aware of the 4 warning signs we've spotted with VBI Vaccines .
Of course VBI Vaccines may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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