Does Rewardle Holdings' (ASX:RXH) Share Price Gain of 100% Match Its Business Performance?
It certainly might concern Rewardle Holdings Limited (ASX:RXH) shareholders to see the share price down 33% in just 30 days. But looking back over the last year, the returns have actually been rather pleasing! To wit, it had solidly beat the market, up 100%.
View our latest analysis for Rewardle Holdings
We don't think Rewardle Holdings's revenue of AU$962,575 is enough to establish significant demand. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. It seems likely some shareholders believe that Rewardle Holdings will significantly advance the business plan 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 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 Rewardle Holdings investors might know.
Our data indicates that Rewardle Holdings had AU$941k more in total liabilities than it had cash, when it last reported in December 2019. That puts it in the highest risk category, according to our analysis. So we're surprised to see the stock up 100% in the last year , but we're happy for holders. It's clear more than a few people believe in the potential. You can click on the image below to see (in greater detail) how Rewardle Holdings's cash levels have changed over time.
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. You can click here to see if there are insiders buying.
A Different Perspective
It's good to see that Rewardle Holdings has rewarded shareholders with a total shareholder return of 100% in the last twelve months. There's no doubt those recent returns are much better than the TSR loss of 57% per year over five years. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. 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 5 warning signs for Rewardle Holdings (4 are significant!) that you should be aware of before investing here.
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 AU exchanges.
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.
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.
