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Investing in stocks comes with the risk that the share price will fall. And there's no doubt that Relief Therapeutics Holding AG (VTX:RLF) stock has had a really bad year. To wit the share price is down 70% in that time. Relief Therapeutics Holding hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time. The falls have accelerated recently, with the share price down 48% in the last three months.
Check out our latest analysis for Relief Therapeutics Holding
With just CHF565,000 worth of revenue in twelve months, we don't think the market considers Relief Therapeutics Holding to have proven its business plan. You have to wonder why venture capitalists aren't funding it. 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. Investors will be hoping that Relief Therapeutics Holding 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 companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. Relief Therapeutics Holding has already given some investors a taste of the bitter losses that high risk investing can cause.
Relief Therapeutics Holding had liabilities exceeding cash by CHF14,028,000 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 70% in the last year, it's probably fair to say that some shareholders no longer believe the company will succeed. You can see in the image below, how Relief Therapeutics Holding'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. What if insiders are ditching the stock hand over fist? 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.
A Different Perspective
Given that the market gained 12% in the last year, Relief Therapeutics Holding shareholders might be miffed that they lost 70%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock down 48% 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. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.