Some stocks are best avoided. We don't wish catastrophic capital loss on anyone. Imagine if you held Promisia Integrative Limited (NZSE:PIL) for half a decade as the share price tanked 97%. And some of the more recent buyers are probably worried, too, with the stock falling 75% in the last year. Shareholders have had an even rougher run lately, with the share price down 33% in the last 90 days. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.
While a drop like that is definitely a body blow, money isn't as important as health and happiness.
View our latest analysis for Promisia Integrative
With just NZ$727,000 worth of revenue in twelve months, we don't think the market considers Promisia Integrative to have proven its business plan. You have to wonder why venture capitalists aren't funding it. So it seems that the investors more focused on would could be, than paying attention to the current revenues (or lack thereof). It seems likely some shareholders believe that Promisia Integrative 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. 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 companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. It certainly is a dangerous place to invest, as Promisia Integrative investors might realise.
Promisia Integrative had net debt of NZ$541,000 when it last reported in December 2018, according to our data. That makes it extremely high risk, in our view. But with the share price diving 50% per year, over 5 years, it's probably fair to say that some shareholders no longer believe the company will succeed. You can see in the image below, how Promisia Integrative's cash and debt levels have changed over time (click to see the values).
In reality it's hard to have much certainty when valuing a business that has neither revenue or profit. Would it bother you if insiders were selling the stock? It would bother me, that's for sure. It costs nothing but a moment of your time to see if we are picking up on any insider selling.
What about the Total Shareholder Return (TSR)?
Investors should note that there's a difference between Promisia Integrative's total shareholder return (TSR) and its share price change, which we've covered above. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Promisia Integrative hasn't been paying dividends, but its TSR of -89% exceeds its share price return of -97%, implying it has either spun-off a business, or raised capital at a discount; thereby providing additional value to shareholders.