Some IQ-AI Limited (LON:IQAI) shareholders are probably rather concerned to see the share price fall 41% over the last three months. But that doesn’t detract from the splendid returns of the last year. We’re very pleased to report the share price shot up 109% in that time. So it may be that the share price is simply cooling off after a strong rise. More important, going forward, is how the business itself is going.
View our latest analysis for IQ-AI
IQ-AI recorded just UK£260,325 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 IQ-AI will significantly advance the business plan before too long.
We think companies that have neither significant revenues nor profits are pretty high risk. 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 companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. IQ-AI has already given some investors a taste of the sweet gains that high risk investing can generate, if your timing is right.
When it reported in June 2019 IQ-AI had minimal cash in excess of all liabilities consider its expenditure: just UK£123k 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. Given how low on cash the it got, investors must really like its potential for the share price to be up 97% in the last year . You can see in the image below, how IQ-AI’s cash levels have changed over time (click to see the values). You can see in the image below, how IQ-AI’s cash levels have changed over time (click to see the values).
In reality it’s hard to have much certainty when valuing a business that has neither revenue or profit. One thing you can do is check if company insiders are buying shares. It’s often positive if so, assuming the buying is sustained and meaningful. You can click here to see if there are insiders buying.
A Different Perspective
IQ-AI boasts a total shareholder return of 109% for the last year. Unfortunately the share price is down 41% over the last quarter. Shorter term share price moves often don’t signify much about the business itself. It’s always interesting to track share price performance over the longer term. But to understand IQ-AI better, we need to consider many other factors. Even so, be aware that IQ-AI is showing 7 warning signs in our investment analysis , and 5 of those can’t be ignored…
Of course IQ-AI may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB exchanges.
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.
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