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Investors Who Bought Kopore Metals (ASX:KMT) Shares A Year Ago Are Now Down 63%

Investing in stocks comes with the risk that the share price will fall. And there's no doubt that Kopore Metals Limited (ASX:KMT) stock has had a really bad year. The share price has slid 63% in that time. Kopore Metals 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 33% in the last three months.

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View our latest analysis for Kopore Metals

We don't think Kopore Metals's revenue of AU$15,091 is enough to establish significant demand. 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). It seems likely some shareholders believe that Kopore Metals will find or develop a valuable new mine before too long.

Companies that lack both meaningful revenue and profits are usually considered high risk. There is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets. So the share price itself impacts the value of the shares (as it determines the cost of capital). 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. Some Kopore Metals investors have already had a taste of the bitterness stocks like this can leave in the mouth.

Kopore Metals had cash in excess of all liabilities of just AU$2.2m when it last reported (December 2018). So if it has not already moved to replenish reserves, we think the near-term chances of a capital raising event are pretty high. That probably explains why the share price is down 63% in the last year. You can see in the image below, how Kopore Metals's cash levels have changed over time (click to see the values).

ASX:KMT Historical Debt, May 27th 2019
ASX:KMT Historical Debt, May 27th 2019

It can be extremely risky to invest in a company that doesn't even have revenue. There's no way to know its value easily. Would it bother you if insiders were selling the stock? It would bother me, that's for sure. You can click here to see if there are insiders selling.

A Different Perspective

Given that the market gained 11% in the last year, Kopore Metals shareholders might be miffed that they lost 63%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The share price decline has continued throughout the most recent three months, down 33%, suggesting an absence of enthusiasm from investors. 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 Kopore Metals'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 AU 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.

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