Bambuser (STO:BUSER) Shareholders Have Enjoyed A Whopping 530% Share Price Gain
While stock picking isn't easy, for those willing to persist and learn, it is possible to buy shares in great companies, and generate wonderful returns. When you find (and hold) a big winner, you can markedly improve your finances. In the case of Bambuser AB (publ) (STO:BUSER), the share price is up an incredible 530% in the last year alone. On top of that, the share price is up 92% in about a quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report. Note that businesses generally develop over the long term, so the returns over the last year might not reflect a long term trend.
We love happy stories like this one. The company should be really proud of that performance!
View our latest analysis for Bambuser
Bambuser recorded just kr4,412,306 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. 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 Bambuser 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 usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets. So the share price itself impacts the value of the shares (as it determines the cost of capital). While some such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Some Bambuser investors have already had a taste of the sweet taste stocks like this can leave in the mouth, as they gain popularity and attract speculative capital.
When it reported in December 2019 Bambuser had minimal cash in excess of all liabilities consider its expenditure: just kr11m to be specific. So if it has not already moved to replenish reserves, we think the near-term chances of a capital raising event are pretty high. It's a testament to the popularity of the business plan that the share price gained 42% in the last year , despite the weak balance sheet. You can click on the image below to see (in greater detail) how Bambuser's cash levels have changed over time. You can click on the image below to see (in greater detail) how Bambuser's cash levels have changed over time.
In reality it's hard to have much certainty when valuing a business that has neither revenue or profit. Given that situation, many of the best investors like to check if insiders have been buying shares. If they are buying a significant amount of shares, that's certainly a good thing. Luckily we are in a position to provide you with this free chart of insider buying (and selling).
A Different Perspective
It's nice to see that Bambuser shareholders have gained 530% over the last year. That's better than the more recent three month gain of 92%, implying that share price has plateaued recently. Having said that, we doubt shareholders would be concerned. It seems the market is simply waiting on more information, because if the business delivers so will the share price (eventually). I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 7 warning signs with Bambuser (at least 3 which can't be ignored) , and understanding them should be part of your investment process.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on SE exchanges.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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