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It is doubtless a positive to see that the AgeX Therapeutics, Inc. (NYSEMKT:AGE) share price has gained some 80% in the last three months. But in truth the last year hasn't been good for the share price. In fact the stock is down 48% in the last year, well below the market return.
AgeX Therapeutics recorded just US$1,855,000 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. 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 AgeX 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.
Our data indicates that AgeX Therapeutics had US$5.0m more in total liabilities than it had cash, when it last reported in March 2020. That puts it in the highest risk category, according to our analysis. But since the share price has dived 48% in the last year , it looks like some investors think it's time to abandon ship, so to speak. The image below shows how AgeX Therapeutics' 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. 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
While AgeX Therapeutics shareholders are down 48% for the year, the market itself is up 18%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. It's great to see a nice little 80% rebound in the last three months. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 5 warning signs for AgeX Therapeutics you should be aware of, and 2 of them are significant.
But note: AgeX Therapeutics may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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. 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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