It is a pleasure to report that the Checkpoint Therapeutics, Inc. (NASDAQ:CKPT) is up 57% in the last quarter. But over the last three years we've seen a quite serious decline. Indeed, the share price is down a tragic 61% in the last three years. So it's good to see it climbing back up. The rise has some hopeful, but turnarounds are often precarious.
We don't think Checkpoint Therapeutics' revenue of US$1,319,000 is enough to establish significant demand. You have to wonder why venture capitalists aren't funding it. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. It seems likely some shareholders believe that Checkpoint Therapeutics has the funding to invent a new product before too long.
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 companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. It certainly is a dangerous place to invest, as Checkpoint Therapeutics investors might realise.
When it reported in June 2020 Checkpoint Therapeutics had minimal cash in excess of all liabilities consider its expenditure: just US$14m 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. With that in mind, you can understand why the share price dropped 17% per year, over 3 years. You can click on the image below to see (in greater detail) how Checkpoint Therapeutics' cash levels have changed over time.
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'd like that just about as much as I like to drink milk and fruit juice mixed together. It costs nothing but a moment of your time to see if we are picking up on any insider selling.
A Different Perspective
We're pleased to report that Checkpoint Therapeutics rewarded shareholders with a total shareholder return of 58% over the last year. What is absolutely clear is that is far preferable to the dismal 17% average annual loss suffered over the last three years. We're generally cautious about putting too much weigh on shorter term data, but the recent improvement is definitely a positive. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example - Checkpoint Therapeutics has 5 warning signs (and 2 which are concerning) we think you should know about.
Checkpoint Therapeutics 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 US exchanges.
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. 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.
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