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The last three months have been tough on Wrap Technologies, Inc. (NASDAQ:WRTC) shareholders, who have seen the share price decline a rather worrying 36%. But that doesn't change the reality that over twelve months the stock has done really well. After all, the share price is up a market-beating 95% in that time.
We don't think Wrap Technologies's revenue of US$140,961 is enough to establish significant demand. 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. Investors will be hoping that Wrap Technologies can make progress and gain better traction for the business, before it runs low on cash.
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. Of course, if you time it right, high risk investments like this can really pay off, as Wrap Technologies investors might know.
When it last reported its balance sheet in March 2019, Wrap Technologies had cash in excess of all liabilities of US$9.7m. 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 up 95% in the last year, the market is seems hopeful about the potential, despite the cash burn. You can see in the image below, how Wrap Technologies'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 Wrap Technologies's cash levels have changed over time.
It can be extremely risky to invest in a company that doesn't even have revenue. There's no way to know its value easily. Given that situation, many of the best investors like to check if insiders have been buying shares. It's usually a positive if they have, as it may indicate they see value in the stock. You can click here to see if there are insiders buying.
A Different Perspective
Wrap Technologies boasts a total shareholder return of 95% for the last year. We regret to report that the share price is down 36% over ninety days. Shorter term share price moves often don't signify much about the business itself. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of Wrap Technologies by clicking this link.
Wrap Technologies is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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.