The Protagonist Therapeutics (NASDAQ:PTGX) Share Price Is Down 45% So Some Shareholders Are Getting Worried
For many investors, the main point of stock picking is to generate higher returns than the overall market. But the risk of stock picking is that you will likely buy under-performing companies. We regret to report that long term Protagonist Therapeutics, Inc. (NASDAQ:PTGX) shareholders have had that experience, with the share price dropping 45% in three years, versus a market return of about 42%. And the share price decline continued over the last week, dropping some 21%.
See our latest analysis for Protagonist Therapeutics
With just US$1,841,000 worth of revenue in twelve months, we don't think the market considers Protagonist Therapeutics to have proven its business plan. This state of affairs suggests that venture capitalists won't provide funds on attractive terms. 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, they may be hoping that Protagonist Therapeutics comes up with a great new product, 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 go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt.
Protagonist Therapeutics had cash in excess of all liabilities of US$62m when it last reported (June 2019). While that's nothing to panic about, there is some possibility the company will raise more capital, especially if profits are not imminent. With the share price down 18% per year, over 3 years , it seems likely that the need for cash is weighing on investors' minds. The image below shows how Protagonist Therapeutics's balance sheet has changed over time; if you want to see the precise values, simply click on the image. The image below shows how Protagonist Therapeutics'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. Would it bother you if insiders were selling the 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
We're pleased to report that Protagonist Therapeutics rewarded shareholders with a total shareholder return of 14% over the last year. This recent result is much better than the 18% drop suffered by shareholders each year (on average) over the last three. The optimist would say this is evidence that the stock has bottomed, and better days lie ahead. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.
Of course Protagonist Therapeutics 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 US exchanges.
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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.
