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Those Who Purchased Hello Pal International (CSE:HP) Shares Three Years Ago Have A 76% Loss To Show For It

Simply Wall St
·3 min read

Hello Pal International Inc. (CSE:HP) shareholders should be happy to see the share price up 20% in the last week. But that is meagre solace in the face of the shocking decline over three years. Indeed, the share price is down a whopping 76% in the last three years. So it's about time shareholders saw some gains. But the more important question is whether the underlying business can justify a higher price still.

Check out our latest analysis for Hello Pal International

We don't think Hello Pal International's revenue of CA$388,944 is enough to establish significant demand. This state of affairs suggests that venture capitalists won't provide funds on attractive terms. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). It seems likely some shareholders believe that Hello Pal International 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 companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. Hello Pal International has already given some investors a taste of the bitter losses that high risk investing can cause.

Hello Pal International had liabilities exceeding cash by CA$3.1m when it last reported in November 2019, according to our data. That makes it extremely high risk, in our view. But since the share price has dived -38% per year, over 3 years , it looks like some investors think it's time to abandon ship, so to speak. You can see in the image below, how Hello Pal International's cash levels have changed over time (click to see the values).

CNSX:HP Historical Debt March 30th 2020
CNSX:HP Historical Debt March 30th 2020

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 would feel more nervous about the company if that were so. It only takes a moment for you to check whether we have identified any insider sales recently.

A Different Perspective

While it's never nice to take a loss, Hello Pal International shareholders can take comfort that their trailing twelve month loss of 7.7% wasn't as bad as the market loss of around 24%. Of course, the long term returns are far more important and the good news is that over five years, the stock has returned 1.8% for each year. In the best case scenario the last year is just a temporary blip on the journey to a brighter future. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 6 warning signs for Hello Pal International (4 shouldn't be ignored) that you should be aware of.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA 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.