These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). To wit, the Blockchain Foundry Inc. (CSE:BCFN) share price is 38% higher than it was a year ago, much better than the market return of around 5.4% (not including dividends) in the same period. That's a solid performance by our standards! Note that businesses generally develop over the long term, so the returns over the last year might not reflect a long term trend.
Blockchain Foundry recorded just CA$537,362 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. Investors will be hoping that Blockchain Foundry can make progress and gain better traction for the business, before it runs low on cash.
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).
Blockchain Foundry had liabilities exceeding cash by CA$158k when it last reported in September 2019, according to our data. That makes it extremely high risk, in our view. So we're surprised to see the stock up 134% in the last year , but we're happy for holders. It's clear more than a few people believe in the potential. The image below shows how Blockchain Foundry's balance sheet has changed over time; if you want to see the precise values, simply click on the image. The image below shows how Blockchain Foundry'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. One thing you can do is check if company insiders are buying shares. It's often positive if so, assuming the buying is sustained and meaningful. Luckily we are in a position to provide you with this free chart of insider buying (and selling).
A Different Perspective
Blockchain Foundry shareholders should be happy with the total gain of 38% over the last twelve months. And the share price momentum remains respectable, with a gain of 57% in the last three months. Demand for the stock from multiple parties is pushing the price higher; it could be that word is getting out about its virtues as a business. It's always interesting to track share price performance over the longer term. But to understand Blockchain Foundry better, we need to consider many other factors. For example, we've discovered 5 warning signs for Blockchain Foundry (3 are a bit unpleasant!) that you should be aware of before investing here.
Of course Blockchain Foundry 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 CA exchanges.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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. Thank you for reading.