Yahoo Finance Introducing Solitario Zinc (NYSEMKT:XPL), The Stock That Tanked 79%
Some stocks are best avoided. We really hate to see fellow investors lose their hard-earned money. Anyone who held Solitario Zinc Corp. (NYSEMKT:XPL) for five years would be nursing their metaphorical wounds since the share price dropped 79% in that time. We also note that the stock has performed poorly over the last year, with the share price down 20%. The falls have accelerated recently, with the share price down 20% in the last three months. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.
View our latest analysis for Solitario Zinc
Solitario Zinc hasn't yet reported any revenue, so it's as much a business idea as an actual business. 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 Solitario Zinc will find or develop a valuable new mine before too long.
We think companies that have neither significant revenues nor profits are pretty high risk. There is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets. So the share price itself impacts the value of the shares (as it determines the cost of capital). 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. Solitario Zinc has already given some investors a taste of the bitter losses that high risk investing can cause.
Solitario Zinc has plenty of cash in the bank, with cash in excess of all liabilities sitting at US$9.6m, when it last reported (June 2019). That allows management to focus on growing the business, and not worry too much about raising capital. But since the share price has dropped 27% per year, over 5 years, it seems like the market might have been over-excited previously. You can click on the image below to see (in greater detail) how Solitario Zinc's cash levels have changed over time. You can see in the image below, how Solitario Zinc'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. Given that situation, would you be concerned if it turned out insiders were relentlessly selling stock? I'd like that just about as much as I like to drink milk and fruit juice mixed together. It costs nothing but a moment of your time to see if we are picking up on any insider selling.
A Different Perspective
Solitario Zinc shareholders are down 20% for the year, but the market itself is up 6.2%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, longer term shareholders are suffering worse, given the loss of 27% doled out over the last five years. We'd need to see some sustained improvements in the key metrics before we could muster much enthusiasm. If you would like to research Solitario Zinc in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
Of course Solitario Zinc 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 US exchanges.
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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. Thank you for reading.
