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If you love investing in stocks you're bound to buy some losers. But the last three years have been particularly tough on longer term Invex Therapeutics Ltd (ASX:IXC) shareholders. Regrettably, they have had to cope with a 88% drop in the share price over that period. 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.
Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.
See our latest analysis for Invex Therapeutics
We don't think Invex Therapeutics' revenue of AU$12,175 is enough to establish significant demand. We can't help wondering why it's publicly listed so early in its journey. Are venture capitalists not interested? So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). It seems likely some shareholders believe that Invex Therapeutics will significantly advance the business plan before too long.
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 go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Invex Therapeutics has already given some investors a taste of the bitter losses that high risk investing can cause.
Invex Therapeutics had cash in excess of all liabilities of just AU$5.2m when it last reported (December 2023). 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 23% per year, over 3 years. The image below shows how Invex Therapeutics' 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. 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.
What About The Total Shareholder Return (TSR)?
We'd be remiss not to mention the difference between Invex Therapeutics' total shareholder return (TSR) and its share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Invex Therapeutics hasn't been paying dividends, but its TSR of -52% exceeds its share price return of -88%, implying it has either spun-off a business, or raised capital at a discount; thereby providing additional value to shareholders.