Yahoo Finance Would Shareholders Who Purchased InfraStrata's (LON:INFA) Stock Five Years Be Happy With The Share price Today?
While it may not be enough for some shareholders, we think it is good to see the InfraStrata plc (LON:INFA) share price up 27% in a single quarter. But spare a thought for the long term holders, who have held the stock as it bled value over the last five years. Indeed, the share price is down a whopping 72% in that time. It's true that the recent bounce could signal the company is turning over a new leaf, but we are not so sure. The important question is if the business itself justifies a higher share price in the long term.
Check out our latest analysis for InfraStrata
We don't think InfraStrata's revenue of UK£1,482,081 is enough to establish significant demand. You have to wonder why venture capitalists aren't funding it. 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 InfraStrata will discover or develop fossil fuel before too long.
We think companies that have neither significant revenues nor profits are pretty high risk. You should be aware that there is always a chance that this sort of company will need to issue more shares to raise money to continue pursuing its business plan. While some such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. It certainly is a dangerous place to invest, as InfraStrata investors might realise.
Our data indicates that InfraStrata had UK£18m more in total liabilities than it had cash, when it last reported in July 2020. That makes it extremely high risk, in our view. But since the share price has dived 23% per year, over 5 years , it looks like some investors think it's time to abandon ship, so to speak. The image below shows how InfraStrata'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. What if insiders are ditching the stock hand over fist? It would bother me, that's for sure. You can click here to see if there are insiders selling.
A Different Perspective
It's good to see that InfraStrata has rewarded shareholders with a total shareholder return of 42% in the last twelve months. That certainly beats the loss of about 12% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. 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. Even so, be aware that InfraStrata is showing 5 warning signs in our investment analysis , and 3 of those make us uncomfortable...
But note: InfraStrata may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB exchanges.
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.
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