Helium One Share Price Forecast July 2021 – Time to Buy HE1?
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Shares of Helium One (LSE: HE1) are in the news days after the company released an operations update concerning their maiden drilling programme for helium deposits. On June 5th, Helium One shares traded near their all-time highs on the back of these announcements, attracting attention from investors.
Helium One – Technical Analysis
Helium One’s financial statement reveals a market capitalization of £156.952 million and total assets worth £11.714 million. The shares have risen more than 450% since its IPO back in December. The companies current annual cash burn is estimated at around $2.7 million which means it has around 2 and a half years left on its cash runway. HE1 shares are trading at £24.95 at the moment, with an uptrend of 0.16%.
Oscillators for Helium One, such as Relative Strength Index (14)(57.4), Stochastic %K (14, 3, 3)(68.01), Average Directional Index (14)(33.59) and Commodity Channel Index (20)(41.56) are pointing towards neutral. On the other hand, Volume Weighted Moving Average (20)(23.76), Simple Moving Average (30)(22.61), Simple Moving Average (100)(15.39) and other moving averages are pointing towards buying.
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Recent Developments
Helium One started its maiden drilling project on June 12th, encountering helium deposits on June 19th. The company was planning for its maiden drilling programme for 5 years before finally finding success. The company has had a stellar performance this year, raising £10 million in April for funding its Tanzania-based Rukwa helium project. The company can make significant profits if they discover helium at the site. If initial estimates regarding Rukwa being a world-class resource with low operating costs come true, the company’s future outlook does look bright indeed.
Should You Buy HE1 Shares?
Investors have to factor in many risks before they decide to pick up HE1 shares since the company is still in its exploration stages. For instance, Helium One is not generating any revenues, burning cash at a faster rate. There is a high probability that the company will be forced to issue shares to raise money, negatively affecting its share price. Additionally, the Helium One share price will be the biggest loser if the future results from their new projects do not live up to expectations. At the moment there isn’t enough data to predict which way these results will move. This makes HE1 shares speculative and risky for the time being.
Investors may be tempted by its share price because of the high demand for Helium which makes it a high-growth market. The company’s current projects look extremely promising. However, these highly speculative shares should be approached with caution right now. Investors should wait for some strong evidence that the company can provide regarding profitability before investing.
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