The Yojee Ltd (ASX: YOJ) share price hit a 52-week low of 6.7 cents today as investors continue to wise up to the software logistics delivery business’s lack of revenues.
For the quarter ending September 30 2018 the Asia and WA-based business posted just $118,000 in revenue and an operating cash loss of $2.02 million, with $7.64 million cash on hand after completing an $8 million capital raising over the period.
In other words Yojee has less than a year’s worth of cash on hand assuming current run rates before it has to raise more capital, find another source of investment, or borrow money. The debt option is unlikely as bankers don’t tend to lend to cash burning businesses with little revenue even if they do have a good story to tell.
The story did impress less-sophisticated retail investors earlier in the year though with the Yojee share price getting to a remarkable 36 cents in early 2018 to give it a market value more than $290 million despite the lack of revenue.
These kind of odd valuations tend to be reserved for software businesses on the ASX that have sold speculators an exciting story, as we also saw with GetSwift Ltd (ASX: GSW) in late 2017 when its share price went above $4 before falling 90% over a year later to 40 cents today.
One problem Yojee now has is that its receipts from customers for the September 2018 quarter are actually lower than the $139,000 posted in December 2017 quarter, which shows how the company’s financials don’t match its boasts.
Another factor weighing down the share price is that if it has to raise capital again it looks likely to be at a low share price (it’s currently 6.7 cents for example), which means existing holders will be diluted even more as shares on issue balloons. Raising money at ever lower prices can act as a weight on a stock as, inter alia, any future earnings will have to be shared around wider.
At its AGM Yojee told investors how “logistics” is expected to be a $15.5 trillion annual revenue market by 2023, with it also talking of its new clients, SaaS, and blockchain capabilities.
However, as you can probably tell, I’m not a buyer of the Yojee story, as I prefer companies with revenues and profits, but which way Yojee’s share price goes in the years ahead remains unknown.
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You can find Tom on Twitter @tommyr345
The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.