The past year for SELLAS Life Sciences Group (NASDAQ:SLS) investors has not been profitable
SELLAS Life Sciences Group, Inc. (NASDAQ:SLS) shareholders should be happy to see the share price up 20% in the last month. But that isn't much consolation to those who have suffered through the declines of the last year. Specifically, the stock price slipped by 67% in that time. Some might say the recent bounce is to be expected after such a bad drop. Of course, it could be that the fall was overdone.
With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.
Check out our latest analysis for SELLAS Life Sciences Group
SELLAS Life Sciences Group recorded just US$1,000,000 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. We can't help wondering why it's publicly listed so early in its journey. Are venture capitalists not interested? As a result, we think it's unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. It seems likely some shareholders believe that SELLAS Life Sciences Group has the funding to invent a new product before too long.
As a general rule, if a company doesn't have much revenue, and it loses money, then it is a high risk investment. 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. Some SELLAS Life Sciences Group investors have already had a taste of the bitterness stocks like this can leave in the mouth.
When it reported in June 2022 SELLAS Life Sciences Group had minimal cash in excess of all liabilities consider its expenditure: just US$14m to be specific. 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 67% in the last year. You can see in the image below, how SELLAS Life Sciences Group's cash levels have changed over time (click to see the values).
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. 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
SELLAS Life Sciences Group shareholders are down 67% for the year, falling short of the market return. The market shed around 15%, no doubt weighing on the stock price. The three-year loss of 16% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should learn about the 5 warning signs we've spotted with SELLAS Life Sciences Group (including 2 which are potentially serious) .
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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