Openn Negotiation Limited (ASX:OPN) shareholders will doubtless be very grateful to see the share price up 33% in the last week. But that doesn’t change the fact that the returns over the last year have been stomach churning. To wit, the stock has dropped 87% over the last year. So it’s not that amazing to see a bit of a bounce. Only time will tell if the company can sustain the turnaround. 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.
While the stock has risen 33% in the past week but long term shareholders are still in the red, let’s see what the fundamentals can tell us.
See our latest analysis for Openn Negotiation
We don’t think Openn Negotiation’s revenue of AU$623,859 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? 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 Openn Negotiation 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. 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 such companies do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized). Some Openn Negotiation investors have already had a taste of the bitterness stocks like this can leave in the mouth.
Openn Negotiation had liabilities exceeding cash by AU$877k when it last reported in June 2023, according to our data. That puts it in the highest risk category, according to our analysis. But since the share price has dived 87% in the last year , it looks like some investors think it’s time to abandon ship, so to speak. The image below shows how Openn Negotiation’s balance sheet has changed over time; if you want to see the precise values, simply click on the image.
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? I would feel more nervous about the company if that were so. It only takes a moment for you to check whether we have identified any insider sales recently.
What About The Total Shareholder Return (TSR)?
We’d be remiss not to mention the difference between Openn Negotiation’s total shareholder return (TSR) and its share price return. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Openn Negotiation hasn’t been paying dividends, but its TSR of -75% exceeds its share price return of -87%, implying it has either spun-off a business, or raised capital at a discount; thereby providing additional value to shareholders.
A Different Perspective
While Openn Negotiation shareholders are down 75% for the year, the market itself is up 7.5%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock flat over the last three months, the market now seems fairly ambivalent about the business. Given the relatively short history of this stock, we’d remain pretty wary until we see some strong business performance. It’s always interesting to track share price performance over the longer term. But to understand Openn Negotiation better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we’ve spotted 7 warning signs for Openn Negotiation you should know about.
Openn Negotiation is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Australian exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
