Agora (NASDAQ:API) adds US$268m to market cap in the past 7 days, though investors from a year ago are still down 82%
It's nice to see the Agora, Inc. (NASDAQ:API) share price up 26% in a week. But that is meagre solace when you consider how the price has plummeted over the last year. Specifically, the stock price nose-dived 82% in that time. So the rise may not be much consolation. The real question is whether the company can turn around its fortunes. We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.
Although the past week has been more reassuring for shareholders, they're still in the red over the last year, so let's see if the underlying business has been responsible for the decline.
Check out our latest analysis for Agora
Because Agora made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Agora grew its revenue by 26% over the last year. That's definitely a respectable growth rate. Unfortunately, the market wanted something better, given it sent the share price 82% lower during the year. It could be that the losses are too much for investors to handle without losing their nerve. It seems that the market has concerns about the future, because that share price action does not seem to reflect the revenue growth at all.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
This free interactive report on Agora's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Given that the market gained 6.2% in the last year, Agora shareholders might be miffed that they lost 82%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock down 45% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Agora , and understanding them should be part of your investment process.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
