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Its rising due to buying sentiment but not the fundamental itself. Thats gonna destroy the companies share price later as it is too high of P/E Ratio while earnings of the company is still low
Dilution of shareholders will happen as the dividend need to be paid by the company is much higher due to high number of shareholders which will dilute the return to the main shareholders while the return is below than the expectations.
In fact, it will affect the cash of the company in order to repay the dividend to the main shareholders with a higher return.
Simplification
Higher Share Price, Lower Earnings, Dilute Shareholders, and ROI is low, high cash reserves needed for the dividend due to higher market share price. Affect cash and deficit return later on.
If P/E is at 15, we could expect to maximise the return within 15 years. Too much P/E, take longer time to maximise your shares.
Actually, even you going for short term, u actually need to look at the fundamental then chart. If u simply buying, confirm u will lose your money within a year.
I could assure you, trader may have lose the money more than expected and you gonna stress out how to find money next time.
Reasons why, the cash and liabilities of the company will definitely impact your return, you may have been waiting the stocks but never go up and lose money and time.
Klau - P/E tu meaning that earnings company is negative and kena tngok sama ada punca dia adalah liability due to finance charges (debt) or operations of the company eg overhead
So, kalau - ve p/e x bagus untuk invest unless company tu loss sebab R&D so boleh consider.. Tp kena careful klau penny stock, chances akan close counter becoming unlisted.
