For many, the main point of investing is to generate higher returns than the overall market. But in any portfolio, there will be mixed results between individual stocks. So we wouldn’t blame long term Bluelake Mineral AB (publ) (NGM:BLUE) shareholders for doubting their decision to hold, with the stock down 77% over a half decade. More recently, the share price has dropped a further 48% in a month.

If the past week is anything to go by, investor sentiment for Bluelake Mineral isn’t positive, so let’s see if there’s a mismatch between fundamentals and the share price.

View our latest analysis for Bluelake Mineral

Bluelake Mineral didn’t have any revenue in the last year, so it’s fair to say it doesn’t yet have a proven product (or at least not one people are paying for). 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. For example, investors may be hoping that Bluelake Mineral finds some valuable resources, before it runs out of money.

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 companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. Some Bluelake Mineral investors have already had a taste of the bitterness stocks like this can leave in the mouth.

Bluelake Mineral had liabilities exceeding cash by kr13m when it last reported in December 2022, according to our data. That makes it extremely high risk, in our view. But since the share price has dived 26% per year, over 5 years , it looks like some investors think it’s time to abandon ship, so to speak. You can see in the image below, how Bluelake Mineral’s cash levels have changed over time (click to see the values).

Of course, the truth is that it is hard to value companies without much revenue or profit. 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.

What About The Total Shareholder Return (TSR)?

We’ve already covered Bluelake Mineral’s share price action, but we should also mention its total shareholder return (TSR). 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. We note that Bluelake Mineral’s TSR, at 48% is higher than its share price return of -77%. When you consider it hasn’t been paying a dividend, this data suggests shareholders have benefitted from a spin-off, or had the opportunity to acquire attractively priced shares in a discounted capital raising.

A Different Perspective

We’re pleased to report that Bluelake Mineral shareholders have received a total shareholder return of 65% over one year. That gain is better than the annual TSR over five years, which is 8%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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. Even so, be aware that Bluelake Mineral is showing 6 warning signs in our investment analysis , and 5 of those are a bit unpleasant…

We will like Bluelake Mineral better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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