Yahoo Finance Investors Who Bought Shield Therapeutics (LON:STX) Shares Three Years Ago Are Now Down 45%
As an investor its worth striving to ensure your overall portfolio beats the market average. But if you try your hand at stock picking, your risk returning less than the market. We regret to report that long term Shield Therapeutics plc (LON:STX) shareholders have had that experience, with the share price dropping 45% in three years, versus a market decline of about 7.9%. The falls have accelerated recently, with the share price down 37% in the last three months. But this could be related to the weak market, which is down 16% in the same period.
View our latest analysis for Shield Therapeutics
With just UK£719,000 worth of revenue in twelve months, we don't think the market considers Shield Therapeutics to have proven its business plan. 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 Shield Therapeutics will significantly advance the business plan before too long.
Companies that lack both meaningful revenue and profits are usually considered 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 to raise equity. So the share price itself impacts the value of the shares (as it determines the cost of capital). 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 Shield Therapeutics had UK£33k more in total liabilities than it had cash, when it last reported in December 2019. That puts it in the highest risk category, according to our analysis. But since the share price has dived -18% per year, over 3 years , it looks like some investors think it's time to abandon ship, so to speak. The image below shows how Shield Therapeutics's balance sheet has changed over time; if you want to see the precise values, simply click on the image.
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, would you be concerned if it turned out insiders were relentlessly selling stock? It would bother me, that's for sure. You can click here to see if there are insiders selling.
A Different Perspective
Shield Therapeutics shareholders are down 18% for the year, falling short of the market return. The market shed around 11%, no doubt weighing on the stock price. Unfortunately, the longer term story isn't pretty, with investment losses running at 18% per year over three years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. 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. Even so, be aware that Shield Therapeutics is showing 4 warning signs in our investment analysis , and 1 of those can't be ignored...
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB exchanges.
Love or hate this article? Concerned about the content? Get in touch with us directly. Alternatively, email 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. 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. Thank you for reading.
