Investors Who Bought Hawkstone Mining (ASX:HWK) Shares A Year Ago Are Now Down 67%
The nature of investing is that you win some, and you lose some. Unfortunately, shareholders of Hawkstone Mining Limited (ASX:HWK) have suffered share price declines over the last year. In that relatively short period, the share price has plunged 67%. Hawkstone Mining may have better days ahead, of course; we've only looked at a one year period. The falls have accelerated recently, with the share price down 60% in the last three months.
See our latest analysis for Hawkstone Mining
With just AU$10,427 worth of revenue in twelve months, we don't think the market considers Hawkstone Mining to have proven its business plan. 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. For example, investors may be hoping that Hawkstone Mining finds some valuable resources, before it runs out of money.
We think companies that have neither significant revenues nor profits are pretty 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 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 Hawkstone Mining investors might realise.
Hawkstone Mining had cash in excess of all liabilities of just AU$1.9m when it last reported (June 2019). So if it has not already moved to replenish reserves, we think the near-term chances of a capital raising event are pretty high. With that in mind, you can understand why the share price dropped 67% in the last year . You can click on the image below to see (in greater detail) how Hawkstone Mining's cash levels have changed over time. You can click on the image below to see (in greater detail) how Hawkstone Mining'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. 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. 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 29% in the last year, Hawkstone Mining shareholders might be miffed that they lost 67%. 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. With the stock down 60% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. Before spending more time on Hawkstone Mining it might be wise to click here to see if insiders have been buying or selling shares.
Of course Hawkstone 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 AU 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.
