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We're definitely into long term investing, but some companies are simply bad investments over any time frame. We really hate to see fellow investors lose their hard-earned money. Anyone who held Kancera AB (publ) (STO:KAN) for five years would be nursing their metaphorical wounds since the share price dropped 79% in that time. And it's not just long term holders hurting, because the stock is down 21% in the last year. The falls have accelerated recently, with the share price down 19% in the last three months.
Check out our latest analysis for Kancera
Kancera recorded just kr358,000 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. 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 Kancera has the funding to invent a new product before too long.
Companies that lack both meaningful revenue and profits are usually considered high risk. 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 such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Kancera has already given some investors a taste of the bitter losses that high risk investing can cause.
Kancera had liabilities exceeding cash by kr1,857,000 when it last reported in March 2019, according to our data. That makes it extremely high risk, in our view. But with the share price diving 27% per year, over 5 years, it's probably fair to say that some shareholders no longer believe the company will succeed. The image below shows how Kancera's balance sheet has changed over time; if you want to see the precise values, simply click on the image. The image below shows how Kancera's balance sheet has changed over time; if you want to see the precise values, simply click on the image.
Of course, the truth is that it is hard to value companies without much revenue or profit. Would it bother you if insiders were selling the stock? I'd like that just about as much as I like to drink milk and fruit juice mixed together. You can click here to see if there are insiders selling.
What about the Total Shareholder Return (TSR)?
Investors should note that there's a difference between Kancera'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. We note that Kancera's TSR, at -75% is higher than its share price return of -79%. When you consider it hasn't been paying a dividend, this data suggests shareholders have benefitted from a spin-off, or had the opportunity to acquire attractively priced shares in a discounted capital raising.