Over the last month the Intellabridge Technology Corporation (CSE:INTL) has been much stronger than before, rebounding by 33%. But that doesn't change the fact that the returns over the last year have been less than pleasing. In fact, the price has declined 50% in a year, falling short of the returns you could get by investing in an index fund.
We don't think Intellabridge Technology's revenue of US$904,697 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? 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. It seems likely some shareholders believe that Intellabridge Technology will significantly advance the business plan before too long.
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 companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing.
Intellabridge Technology had liabilities exceeding cash by US$265k when it last reported in September 2019, according to our data. That makes it extremely high risk, in our view. But with the share price diving 50% in the last year , it's probably fair to say that some shareholders no longer believe the company will succeed. The image below shows how Intellabridge Technology'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 Intellabridge Technology's balance sheet has changed over time; if you want to see the precise values, simply click on the image.
Of course, the truth is that it is hard to value companies without much revenue or profit. Would it bother you if insiders were selling the stock? I would feel more nervous about the company if that were so. It only takes a moment for you to check whether we have identified any insider sales recently.
A Different Perspective
While Intellabridge Technology shareholders are down 50% for the year, the market itself is up 12%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The share price decline seems to have halted in the most recent three months, with the relatively flat share price suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 5 warning signs with Intellabridge Technology (at least 4 which shouldn't be ignored) , and understanding them should be part of your investment process.
Of course Intellabridge Technology 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.
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