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Introducing RAIZE - Instituição de Pagamentos (ELI:MLRZE), The Stock That Dropped 23% In The Last Year

It's easy to match the overall market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Investors in RAIZE - Instituição de Pagamentos, S.A. (ELI:MLRZE) have tasted that bitter downside in the last year, as the share price dropped 23%. That's well bellow the market return of -10%. RAIZE - Instituição de Pagamentos may have better days ahead, of course; we've only looked at a one year period. It's down 33% in about a quarter. Of course, this share price action may well have been influenced by the 19% decline in the broader market, throughout the period.

View our latest analysis for RAIZE - Instituição de Pagamentos

RAIZE - Instituição de Pagamentos recorded just €574,320 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. You have to wonder why venture capitalists aren't funding it. 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 RAIZE - Instituição de Pagamentos can make progress and gain better traction for the business, before it runs low on cash.

Companies that lack both meaningful revenue and profits are usually considered high risk. There is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets to raise equity. So the share price itself impacts the value of the shares (as it determines the cost of capital). 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).

RAIZE - Instituição de Pagamentos had cash in excess of all liabilities of just €94k when it last reported (December 2019). So if it hasn't remedied the situation already, it will almost certainly have to raise more capital soon. That probably explains why the share price is down 23% in the last year. The image below shows how RAIZE - Instituição de Pagamentos's balance sheet has changed over time; if you want to see the precise values, simply click on the image.

ENXTLS:MLRZE Historical Debt March 29th 2020
ENXTLS:MLRZE Historical Debt March 29th 2020

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? It would bother me, that's for sure. It costs nothing but a moment of your time to see if we are picking up on any insider selling.

A Different Perspective

RAIZE - Instituição de Pagamentos shareholders are down 23% for the year, even worse than the market loss of 10%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. It's worth noting that the last three months did the real damage, with a 33% decline. So it seems like some holders have been dumping the stock of late - and that's not bullish. It's always interesting to track share price performance over the longer term. But to understand RAIZE - Instituição de Pagamentos better, we need to consider many other factors. To that end, you should learn about the 4 warning signs we've spotted with RAIZE - Instituição de Pagamentos (including 2 which is are concerning) .

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on PT 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.

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. Thank you for reading.