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Imagine Owning iMining Blockchain and Cryptocurrency (CVE:IMIN) And Trying To Stomach The 82% Share Price Drop

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iMining Blockchain and Cryptocurrency Inc. (CVE:IMIN) shareholders should be happy to see the share price up 14% in the last week. But will that heal all the wounds inflicted over 5 years of declines? Unlikely. Indeed, the share price is down a whopping 82% in that time. So we don't gain too much confidence from the recent recovery. The fundamental business performance will ultimately determine if the turnaround can be sustained.

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.

View our latest analysis for iMining Blockchain and Cryptocurrency

With just CA$56,043 worth of revenue in twelve months, we don't think the market considers iMining Blockchain and Cryptocurrency to have proven its business plan. We can't help wondering why it's publicly listed so early in its journey. Are venture capitalists not interested? So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). Investors will be hoping that iMining Blockchain and Cryptocurrency can make progress and gain better traction for the business, before it runs low on cash.

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 companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. It certainly is a dangerous place to invest, as iMining Blockchain and Cryptocurrency investors might realise.

Our data indicates that iMining Blockchain and Cryptocurrency had CA$61k more in total liabilities than it had cash, when it last reported in August 2019. That puts it in the highest risk category, according to our analysis. But since the share price has dived -29% per year, over 5 years , it looks like some investors think it's time to abandon ship, so to speak. You can click on the image below to see (in greater detail) how iMining Blockchain and Cryptocurrency's cash levels have changed over time. You can see in the image below, how iMining Blockchain and Cryptocurrency's cash levels have changed over time (click to see the values).

TSXV:IMIN Historical Debt, January 22nd 2020
TSXV:IMIN Historical Debt, January 22nd 2020

In reality it's hard to have much certainty when valuing a business that has neither revenue or profit. What if insiders are ditching the stock hand over fist? 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

Investors in iMining Blockchain and Cryptocurrency had a tough year, with a total loss of 33%, against a market gain of about 14%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 29% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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 iMining Blockchain and Cryptocurrency (at least 3 which are concerning) , and understanding them should be part of your investment process.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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.