It's not possible to invest over long periods without making some bad investments. But really bad investments should be rare. So take a moment to sympathize with the long term shareholders of Midatech Pharma plc (LON:MTPH), who have seen the share price tank a massive 97% over a three year period. That'd be enough to cause even the strongest minds some disquiet. And the ride hasn't got any smoother in recent times over the last year, with the price 72% lower in that time. Even worse, it's down 42% in about a month, which isn't fun at all.

While a drop like that is definitely a body blow, money isn't as important as health and happiness.

Check out our latest analysis for Midatech Pharma

Midatech Pharma recorded just UK£1,841,000 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. We can't help wondering why it's publicly listed so early in its journey. Are venture capitalists not interested? So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). For example, they may be hoping that Midatech Pharma comes up with a great new product, before it runs out of money.

We think companies that have neither significant revenues nor profits are pretty high risk. 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 such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Midatech Pharma has already given some investors a taste of the bitter losses that high risk investing can cause.

Midatech Pharma had cash in excess of all liabilities of just UK£5.2m when it last reported (June 2019). 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 70% per year, over 3 years . You can see in the image below, how Midatech Pharma's cash levels have changed over time (click to see the values). The image below shows how Midatech Pharma's balance sheet has changed over time; if you want to see the precise values, simply click on the image.

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. You can click here to see if there are insiders selling.