Investors Who Bought Motus GI Holdings (NASDAQ:MOTS) Shares A Year Ago Are Now Down 51%
It is doubtless a positive to see that the Motus GI Holdings, Inc. (NASDAQ:MOTS) share price has gained some 47% in the last three months. But that doesn't change the fact that the returns over the last year have been disappointing. During that time the share price has sank like a stone, descending 51%. The share price recovery is not so impressive when you consider the fall. Of course, it could be that the fall was overdone.
View our latest analysis for Motus GI Holdings
We don't think Motus GI Holdings's revenue of US$6,000 is enough to establish significant demand. This state of affairs suggests that venture capitalists won't provide funds on attractive terms. 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 Motus GI Holdings will significantly advance the business plan 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 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 Motus GI Holdings investors have already had a taste of the bitterness stocks like this can leave in the mouth.
Motus GI Holdings had cash in excess of all liabilities of US$20m when it last reported (September 2019). While that's nothing to panic about, there is some possibility the company will raise more capital, especially if profits are not imminent. With the share price down 51% in the last year , it seems likely that the need for cash is weighing on investors' minds. The image below shows how Motus GI Holdings's balance sheet has changed over time; if you want to see the precise values, simply click on the image. You can see in the image below, how Motus GI Holdings'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. Given that situation, would you be concerned if it turned out insiders were relentlessly selling stock? 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.
A Different Perspective
Given that the market gained 23% in the last year, Motus GI Holdings shareholders might be miffed that they lost 51%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Putting aside the last twelve months, it's good to see the share price has rebounded by 47%, in the last ninety days. This could just be a bounce because the selling was too aggressive, but fingers crossed it's the start of a new trend. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 5 warning signs with Motus GI Holdings (at least 2 which can't be ignored) , and understanding them should be part of your investment process.
Motus GI Holdings is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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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