Introducing Sensyne Health (LON:SENS), The Stock That Dropped 39% In The Last Year
The simplest way to benefit from a rising market is to buy an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. Investors in Sensyne Health plc (LON:SENS) have tasted that bitter downside in the last year, as the share price dropped 39%. That's disappointing when you consider the market returned 6.7%. We wouldn't rush to judgement on Sensyne Health because we don't have a long term history to look at. The falls have accelerated recently, with the share price down 23% in the last three months. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.
See our latest analysis for Sensyne Health
We don't think Sensyne Health's revenue of UK£136,000 is enough to establish significant demand. 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). Investors will be hoping that Sensyne Health can make progress and gain better traction for the business, before it runs low on cash.
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 do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized).
When it last reported its balance sheet in April 2019, Sensyne Health had cash in excess of all liabilities of UK£44m. 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 39% in the last year , it seems likely that the need for cash is weighing on investors' minds. You can click on the image below to see (in greater detail) how Sensyne Health's cash levels have changed over time. You can click on the image below to see (in greater detail) how Sensyne Health's cash levels have changed over time.
Of course, the truth is that it is hard to value companies without much 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
Given that the market gained 6.7% in the last year, Sensyne Health shareholders might be miffed that they lost 39%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock down 23% 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. You could get a better understanding of Sensyne Health's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB 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.
