Opthea Limited (ASX:OPT) shareholders might be concerned after seeing the share price drop 20% in the last quarter. But over five years returns have been remarkably great. To be precise, the stock price is 1720% higher than it was five years ago, a wonderful performance by any measure. Arguably, the recent fall is to be expected after such a strong rise. Only time will tell if there is still too much optimism currently reflected in the share price.

Anyone who held for that rewarding ride would probably be keen to talk about it.

View our latest analysis for Opthea

With just AU$152,584 worth of revenue in twelve months, we don't think the market considers Opthea to have proven its business plan. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. It seems likely some shareholders believe that Opthea has the funding to invent a new product before too long.

We think companies that have neither significant revenues nor profits are pretty high risk. 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 companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. Of course, if you time it right, high risk investments like this can really pay off, as Opthea investors might know.

Opthea has plenty of cash in the bank, with cash in excess of all liabilities sitting at AU$68m, when it last reported (December 2019). That allows management to focus on growing the business, and not worry too much about raising capital. And given that the share price has shot up 18% per year, over 5 years , it's fair to say investors are liking management's vision for the future. You can see in the image below, how Opthea'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. However you can take a look at whether insiders have been buying up shares. It's usually a positive if they have, as it may indicate they see value in the stock. You can click here to see if there are insiders buying.

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Opthea's total shareholder return (TSR) and its share price return. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Opthea hasn't been paying dividends, but its TSR of 1739% exceeds its share price return of 1720%, implying it has either spun-off a business, or raised capital at a discount; thereby providing additional value to shareholders.