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Easy Come, Easy Go: How BLOK Technologies (CNSX:BLK) Shareholders Got Unlucky And Saw 92% Of Their Cash Evaporate

Simply Wall St

As every investor would know, you don't hit a homerun every time you swing. But it should be a priority to avoid stomach churning catastrophes, wherever possible. It must have been painful to be a BLOK Technologies Inc. (CNSX:BLK) shareholder over the last year, since the stock price plummeted 92% in that time. A loss like this is a stark reminder that portfolio diversification is important. To make matters worse, the returns over three years have also been really disappointing (the share price is 80% lower than three years ago). Unhappily, the share price slid 20% in the last week.

We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.

Check out our latest analysis for BLOK Technologies

BLOK Technologies hasn't yet reported any revenue yet, so it's as much a business idea as an actual business. This state of affairs suggests that venture capitalists won't provide funds on attractive terms. 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 BLOK Technologies will significantly advance the business plan before too long.

Companies that lack both meaningful revenue and profits are usually considered high risk. You should be aware that there is always a chance that this sort of company will need to issue more shares to raise money to continue pursuing its business plan. While some such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. BLOK Technologies has already given some investors a taste of the bitter losses that high risk investing can cause.

BLOK Technologies had net debt of CA$318,469 when it last reported in September 2018, according to our data. That makes it extremely high risk, in our view. But since the share price has dived -92% 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 BLOK Technologies's cash and debt levels have changed over time (click to see the values).

CNSX:BLK Historical Debt, April 19th 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. Given that situation, would you be concerned if it turned out insiders were relentlessly selling stock? It would bother me, that's for sure. You can click here to see if there are insiders selling.

A Different Perspective

Over the last year, BLOK Technologies shareholders took a loss of 92%. In contrast the market gained about 7.6%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. The three-year loss of 42% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. You could get a better understanding of BLOK Technologies's growth by checking out this more detailed historical graph of 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 CA 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.