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Easy Come, Easy Go: How Nubeva Technologies (CVE:NBVA) Shareholders Got Unlucky And Saw 82% Of Their Cash Evaporate

Simply Wall St

Nubeva Technologies Ltd. (CVE:NBVA) shareholders should be happy to see the share price up 30% in the last week. But that isn't much consolation for the painful drop we've seen in the last year. During that time the share price has plummeted like a stone, down 82%. Arguably, the recent bounce is to be expected after such a bad drop. The important thing is whether the company can turn it around, longer term.

We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.

Check out our latest analysis for Nubeva Technologies

Nubeva Technologies recorded just US$114,295 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. You have to wonder why venture capitalists aren't funding it. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). It seems likely some shareholders believe that Nubeva Technologies 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. 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. Some Nubeva Technologies investors have already had a taste of the bitterness stocks like this can leave in the mouth.

Nubeva Technologies had cash in excess of all liabilities of just US$2.8m when it last reported (October 2019). So if it has not already moved to replenish reserves, we think the near-term chances of a capital raising event are pretty high. That probably explains why the share price is down 82% in the last year . You can see in the image below, how Nubeva Technologies's cash levels have changed over time (click to see the values). You can click on the image below to see (in greater detail) how Nubeva Technologies's cash levels have changed over time.

TSXV:NBVA Historical Debt, January 31st 2020

Of course, the truth is that it is hard to value companies without much revenue or profit. Given that situation, would you be concerned if it turned out insiders were relentlessly selling stock? It would bother me, that's for sure. It costs nothing but a moment of your time to see if we are picking up on any insider selling.

A Different Perspective

While Nubeva Technologies shareholders are down 82% for the year, the market itself is up 11%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock down 24% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. 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 instance, we've identified 7 warning signs for Nubeva Technologies (4 are potentially serious) that you should be aware of.

We will like Nubeva Technologies better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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 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.