The Primorus Investments (LON:PRIM) Share Price Is Down 64% So Some Shareholders Are Wishing They Sold
We think intelligent long term investing is the way to go. But unfortunately, some companies simply don't succeed. For example, after five long years the Primorus Investments plc (LON:PRIM) share price is a whole 64% lower. That's an unpleasant experience for long term holders.
See our latest analysis for Primorus Investments
With just UK£549,000 worth of revenue in twelve months, we don't think the market considers Primorus Investments to have proven its business plan. 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. For example, investors may be hoping that Primorus Investments finds some valuable resources, before it runs out of money.
We think companies that have neither significant revenues nor profits are pretty 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). It certainly is a dangerous place to invest, as Primorus Investments investors might realise.
When it reported in June 2019 Primorus Investments had minimal cash in excess of all liabilities consider its expenditure: just UK£9.0k 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. With that in mind, you can understand why the share price dropped 19% per year, over 5 years . You can see in the image below, how Primorus Investments's cash levels have changed over time (click to see the values). The image below shows how Primorus Investments's balance sheet has changed over time; if you want to see the precise values, simply click on the image.
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'd like that just about as much as I like to drink milk and fruit juice mixed together. It only takes a moment for you to check whether we have identified any insider sales recently.
A Different Perspective
Primorus Investments shareholders gained a total return of 8.7% during the year. But that return falls short of the market. But at least that's still a gain! Over five years the TSR has been a reduction of 19% per year, over five years. It could well be that the business is stabilizing. Before spending more time on Primorus Investments it might be wise to click here to see if insiders have been buying or selling shares.
We will like Primorus Investments better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB 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.
