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It's not possible to invest over long periods without making some bad investments. But you want to avoid the really big losses like the plague. So take a moment to sympathize with the long term shareholders of Volt Power Group Limited (ASX:VPR), who have seen the share price tank a massive 98% over a three year period. That would be a disturbing experience. And more recent buyers are having a tough time too, with a drop of 50% in the last year. It's down 33% in the last seven days.
We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.
See our latest analysis for Volt Power Group
With just AU$1,310,137 worth of revenue in twelve months, we don't think the market considers Volt Power Group to have proven its business plan. We can't help wondering why it's publicly listed so early in its journey. Are venture capitalists not interested? As a result, we think it's unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. It seems likely some shareholders believe that Volt Power Group will significantly advance the business plan 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 do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized). Volt Power Group has already given some investors a taste of the bitter losses that high risk investing can cause.
When it reported in June 2019 Volt Power Group had minimal cash in excess of all liabilities consider its expenditure: just AU$58k to be specific. So if it hasn't remedied the situation already, it will almost certainly have to raise more capital soon. With that in mind, you can understand why the share price dropped 74% per year, over 3 years . The image below shows how Volt Power Group's balance sheet has changed over time; if you want to see the precise values, simply click on the image. You can see in the image below, how Volt Power Group'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.