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It's not a secret that every investor will make bad investments, from time to time. But it would be foolish to simply accept every extremely large loss as an inevitable part of the game. So we hope that those who held Tantalex Resources Corporation (CNSX:TTX) during the last year don't lose the lesson, in addition to the 75% hit to the value of their shares. A loss like this is a stark reminder that portfolio diversification is important. At least the damage isn't so bad if you look at the last three years, since the stock is down 25% in that time. Furthermore, it's down 25% in about a quarter. That's not much fun for holders.
Tantalex Resources hasn't yet reported any revenue yet, so it's as much a business idea as an actual business. 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). For example, investors may be hoping that Tantalex Resources finds some valuable resources, before it runs out of money.
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. It certainly is a dangerous place to invest, as Tantalex Resources investors might realise.
Our data indicates that Tantalex Resources had CA$4,665,021 more in total liabilities than it had cash, when it last reported in November 2018. That puts it in the highest risk category, according to our analysis. But with the share price diving 75% in the last year, it's probably fair to say that some shareholders no longer believe the company will succeed. You can click on the image below to see (in greater detail) how Tantalex Resources's cash levels have changed over time.
Of course, the truth is that it is hard to value companies without much revenue or profit. What if insiders are ditching the stock hand over fist? I'd like that just about as much as I like to drink milk and fruit juice mixed together. It only takes a moment for you to check whether we have identified any insider sales recently.
A Different Perspective
Tantalex Resources shareholders are down 75% for the year, but the broader market is up 2.5%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. The three-year loss of 9.1% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Warren Buffett famously said he likes to 'buy when there is blood on the streets', he also focusses on high quality stocks with solid prospects. Before spending more time on Tantalex Resources it might be wise to click here to see if insiders have been buying or selling shares.
But note: Tantalex Resources may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.