The truth is that if you invest for long enough, you're going to end up with some losing stocks. But long term Kalina Power Limited (ASX:KPO) shareholders have had a particularly rough ride in the last three year. Unfortunately, they have held through a 64% decline in the share price in that time. The silver lining is that the stock is up 6.7% in about a week.
We don't think Kalina Power's revenue of AU$44,570 is enough to establish significant demand. You have to wonder why venture capitalists aren't funding it. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. Investors will be hoping that Kalina Power can make progress and gain better traction for the business, before it runs low on cash.
We think companies that have neither significant revenues nor profits are pretty 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 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 Kalina Power investors might realise.
Kalina Power had liabilities exceeding cash by AU$1.8m when it last reported in June 2019, according to our data. That puts it in the highest risk category, according to our analysis. But since the share price has dived -29% per year, over 3 years , it looks like some investors think it's time to abandon ship, so to speak. The image below shows how Kalina Power's balance sheet has changed over time; if you want to see the precise values, simply click on the image. You can click on the image below to see (in greater detail) how Kalina Power'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. What if insiders are ditching the stock hand over fist? It would bother me, that's for sure. You can click here to see if there are insiders selling.
A Different Perspective
It's nice to see that Kalina Power shareholders have gained 52% (in total) over the last year. That certainly beats the loss of about 29% per year over three years. We're generally cautious about putting too much weigh on shorter term data, but the recent improvement is definitely a positive. You could get a better understanding of Kalina Power's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
But note: Kalina Power may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
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 firstname.lastname@example.org. 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.