Even the best stock pickers will make plenty of bad investments. Unfortunately, shareholders of Vendetta Mining Corp. (CVE:VTT) have suffered share price declines over the last year. The share price has slid 55% in that time. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 11% in three years. Shareholders have had an even rougher run lately, with the share price down 23% in the last 90 days.
Vendetta Mining didn't have any revenue in the last year, so it's fair to say it doesn't yet have a proven product (or at least not one people are paying for). 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). For example, investors may be hoping that Vendetta Mining finds some valuable resources, before it runs out of money.
Companies that lack both meaningful revenue and profits are usually considered high risk. 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 such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Vendetta Mining has already given some investors a taste of the bitter losses that high risk investing can cause.
Our data indicates that Vendetta Mining had CA$585,312 more in total liabilities than it had cash, when it last reported in February 2019. That makes it extremely high risk, in our view. But with the share price diving 55% in the last year, it's probably fair to say that some shareholders no longer believe the company will succeed. You can click on the image below to see (in greater detail) how Vendetta Mining's cash levels have changed over time. The image below shows how Vendetta Mining's balance sheet has changed over time; if you want to see the precise values, simply click on the image.
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 only takes a moment for you to check whether we have identified any insider sales recently.
A Different Perspective
The last twelve months weren't great for Vendetta Mining shares, which cost holders 55%, while the market was up about 1.4%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Shareholders have lost 3.6% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. If you would like to research Vendetta Mining in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
Of course Vendetta Mining may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.
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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. Thank you for reading.