The nature of investing is that you win some, and you lose some. And there's no doubt that Pulse Oil Corp. (CVE:PUL) stock has had a really bad year. To wit the share price is down 58% in that time. Because Pulse Oil hasn't been listed for many years, the market is still learning about how the business performs. Furthermore, it's down 35% in about a quarter. That's not much fun for holders. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.
We don't think Pulse Oil's revenue of CA$2,337,819 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 shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. For example, they may be hoping that Pulse Oil finds fossil fuels with an exploration program, before it runs out of money.
Companies that lack both meaningful revenue and profits are usually considered 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. Pulse Oil has already given some investors a taste of the bitter losses that high risk investing can cause.
Pulse Oil had liabilities exceeding cash by CA$2,016,562 when it last reported in June 2019, according to our data. That puts it in the highest risk category, according to our analysis. But with the share price diving 58% in the last year, it's probably fair to say that some shareholders no longer believe the company will succeed. You can see in the image below, how Pulse Oil's cash levels have changed over time (click to see the values). You can click on the image below to see (in greater detail) how Pulse Oil'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. 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
While Pulse Oil shareholders are down 58% for the year, the market itself is up 3.0%. 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 35%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. Before forming an opinion on Pulse Oil you might want to consider these 3 valuation metrics.
Of course Pulse Oil 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 CA 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 email@example.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.