This month, we saw the Globalive Technology Inc. (CVE:LIVE) up an impressive 80%. But that's small comfort given the dismal price performance over the last year. Like a receding glacier in a warming world, the share price has melted 54% in that period. The share price recovery is not so impressive when you consider the fall. Arguably, the fall was overdone.
Globalive Technology recorded just CA$44,616 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. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. It seems likely some shareholders believe that Globalive Technology will significantly advance the business plan 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. 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 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). Globalive Technology has already given some investors a taste of the bitter losses that high risk investing can cause.
When it last reported its balance sheet in September 2019, Globalive Technology had cash in excess of all liabilities of CA$21m. While that's nothing to panic about, there is some possibility the company will raise more capital, especially if profits are not imminent. We'd venture that shareholders are concerned about the need for more capital, because the share price has dropped 54% in the last year . You can see in the image below, how Globalive Technology's cash levels have changed over time (click to see the values). You can see in the image below, how Globalive Technology's cash levels have changed over time (click to see the values).
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? It would bother me, that's for sure. It costs nothing but a moment of your time to see if we are picking up on any insider selling.
A Different Perspective
Given that the market gained 19% in the last year, Globalive Technology shareholders might be miffed that they lost 54%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. Putting aside the last twelve months, it's good to see the share price has rebounded by 29%, in the last ninety days. This could just be a bounce because the selling was too aggressive, but fingers crossed it's the start of a new trend. You could get a better understanding of Globalive Technology's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
We will like Globalive Technology 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 CA exchanges.
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