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There's no doubt that investing in the stock market is a truly brilliant way to build wealth. But if when you choose to buy stocks, some of them will be below average performers. For example, the Q-linea AB (publ) (STO:QLINEA), share price is up over the last year, but its gain of 9.9% trails the market return. We'll need to follow Q-linea for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.
See our latest analysis for Q-linea
We don't think Q-linea's revenue of kr1,317,000 is enough to establish significant demand. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. Investors will be hoping that Q-linea can make progress and gain better traction for the business, before it runs low on cash.
As a general rule, if a company doesn't have much revenue, and it loses money, then it is a high risk investment. 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).
When it last reported its balance sheet in September 2019, Q-linea had cash in excess of all liabilities of kr209m. That's not too bad but management may have to think about raising capital or taking on debt, unless the company is close to breaking even. With the share price gaining 160% in the last year , the market seems to be optimistic, despite the limited cash reserves. The image below shows how Q-linea'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 Q-linea's cash levels have changed over time (click to see the values).
Of course, the truth is that it is hard to value companies without much revenue or profit. One thing you can do is check if company insiders are buying shares. If they are buying a significant amount of shares, that's certainly a good thing. You can click here to see if there are insiders buying.
A Different Perspective
We're happy to report that Q-linea are up 9.9% over the year. The bad news is that's no better than the average market return, which was roughly 24%. It's always interesting to track share price performance over the longer term. But to understand Q-linea better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we've spotted with Q-linea (including 2 which is don't sit too well with us) .