If You Had Bought Alligator Bioscience (STO:ATORX) Stock A Year Ago, You'd Be Sitting On A 56% Loss, Today
The nature of investing is that you win some, and you lose some. And there's no doubt that Alligator Bioscience AB (publ) (STO:ATORX) stock has had a really bad year. The share price is down a hefty 56% in that time. Alligator Bioscience may have better days ahead, of course; we've only looked at a one year period. Shareholders have had an even rougher run lately, with the share price down 50% in the last 90 days.
Check out our latest analysis for Alligator Bioscience
We don't think Alligator Bioscience's revenue of kr25,930,000 is enough to establish significant demand. 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 Alligator Bioscience has the funding to invent a new product 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. It certainly is a dangerous place to invest, as Alligator Bioscience investors might realise.
When it last reported its balance sheet in June 2019, Alligator Bioscience had cash in excess of all liabilities of kr259m. That's not too bad but management may have to think about raising capital or taking on debt, unless the company is close to breaking even. With the share price down 56% in the last year , it seems likely that the need for cash is weighing on investors' minds. You can see in the image below, how Alligator Bioscience's cash levels have changed over time (click to see the values). You can see in the image below, how Alligator Bioscience's cash levels have changed over time (click to see the values).
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? I would feel more nervous about the company if that were so. You can click here to see if there are insiders selling.
A Different Perspective
While Alligator Bioscience shareholders are down 56% for the year, the market itself is up 15%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. The share price decline has continued throughout the most recent three months, down 50%, 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. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.
There are plenty of other companies that have insiders buying up shares. You probably do 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 SE exchanges.
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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.
