New Concept Energy, Inc. (NYSEAMERICAN: GBR) is a stock that has garnered quite a bit of attention recently, and for good reason. Before June 28th, the stock consistently traded at prices under $1.50 per share and had poor volume to match. However, starting on June 28th, the stock went on an upward run. One that ended on July 2nd with the stock peaking out with a close at $8.90 per share. While the stock has given up much of the gains that we saw, trading at just $3.69 today, it is still well above where it started. Nonetheless, if you’re looking to ride this wave, make sure that you’re careful about it!
Who Is New Concept Energy
GBR, or New Concept Energy is indeed a relatively new concept, compiled by a company that has been around for some time. However, the company wasn’t always an energy company. Here’s a quick history of the company:
- 1991 – In 1991, what we know as New Concept Energy today was actually incorporated as a medical company known as Medical Resources Companies of America.
- 1996 – In 1996 GBR saw its first name change, when the name was changed from Medical Resources Companies of America to Greenbriar Corporation (which is actually where it got the ticker GBR).
- 2005 – Yet another name change and direction change came down the line in 2005 when Greenbriar Corporation moved away from the market it as in and went into the telecommunications business, changing its name to CabelTel International.
- 2008 – Finally, in 2008, the company processed its final name change to date, changing the name of the company to what we all know today, New Concept Energy. This name change came amid surging oil prices as the company snapped up oil and gas properties through various acquisitions.
Before we go any further with this, I’d like to point out issue #1. GBR has a history of scrapping failed businesses and purchasing assets to start anew every time times get hard. This can be seen from the fact that in just 27 years that the company has been around, it has changed its name 4 times, chacing what it believed to be the latest and greatest opportunity and staying behind the curve, never actually generating profit for investors from these opportunities. So, when asked, What is New Concept Energy? The answer is simple. GBR is a company that has a track record of failure and name changes that current focuses in the oil and gas sector, while this isn’t likely to be the focus for much longer considering the company’s record!
A Small Company With Very Large Costs
When we dig into what GBR really has to offer, what we see is nothing more than a collection of 153 oil and gas wells in Ohio and West Virginia that produce about 5,100 barrels per oil (down from 6,100 in 2016). The company also owns a small retirement home. As you could imagine, the company hasn’t quite seen incredible success with such minimal assets. In fact, it’s a very small company. At the moment, the company only has six employees!
Let’s put that into perspective. Your friendly neighborhood fast food restaurant likely has at least double the amount of employees of this publicly traded company. In terms of assets, GBR simply can’t own much. If it did, it wouldn’t have enough man power to maintain the health of those assets. Ultimately, the company has very little, but that doesn’t mean that its overhead is small. In fact, losses are absolutely massive!
Breaking Down Revenue And Losses
Ultimately, GBR isn’t even producing revenue of $1 million per year yet. In fact, in the year 2017, the company posted revenue of just $791,000. Sure, that figure showed very minimal growth from the $764,000 in revenue seen in the year 2016, but looking back at 2015, proved to be a decline from $820,000. The bottom line is that looking at revenue over the past few years shows that revenue has been stagnant, if not on the decline.
As you could imagine, a publicly traded company isn’t going to get too far on revenue of less than $1 million a year. In fact, in the year 2017, GBR reported operating costs at over $4 million and losses of more than $3.1 million. The bottom line is that with no real revenue growth, the company is doomed to continue seeing losses in the foreseeable future.
Look Out Below
With the recent rise in value, investors have given GBR a valuation of around $10 million. That’s pretty steep considering that the company with only 6 employees has total net assets that amount to about between $400,000 or $500,000 and fails to generate profits. This combined with the fact that revenue remains stagnant with no real prospect of meaningful gains in the figure in the foreseeable future says that the valuation is obsurdly high. Combine this with a company history of a proven lack of direction and we have a big loser. Look out below my friends, this stock is going to tumble!