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The nature of investing is that you win some, and you lose some. And unfortunately for Allegiant Gold Ltd. (CVE:AUAU) shareholders, the stock is a lot lower today than it was a year ago. The share price is down a hefty 59% in that time. Allegiant Gold may have better days ahead, of course; we've only looked at a one year period. Furthermore, it's down 23% in about a quarter. That's not much fun for holders. 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 Allegiant Gold
With zero revenue generated over twelve months, we don't think that Allegiant Gold has proved its business plan yet. You have to wonder why venture capitalists aren't funding it. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). For example, investors may be hoping that Allegiant Gold finds some valuable resources, before it runs out of money.
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 such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Some Allegiant Gold investors have already had a taste of the bitterness stocks like this can leave in the mouth.
When it reported in March 2019 Allegiant Gold had minimal cash in excess of all liabilities consider its expenditure: just CA$17k to be specific. So if it has not already moved to replenish reserves, we think the near-term chances of a capital raising event are pretty high. That probably explains why the share price is down 59% in the last year. You can see in the image below, how Allegiant Gold's cash levels have changed over time (click to see the values).
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? I would feel more nervous about the company if that were so. You can click here to see if there are insiders selling.
A Different Perspective
Given that the market gained 2.5% in the last year, Allegiant Gold shareholders might be miffed that they lost 59%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock down 23% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.