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Unless you borrow money to invest, the potential losses are limited. But if you pick the right stock, you can make a lot more than 100%. For example, the Senmiao Technology Limited (NASDAQ:AIHS) share price had more than doubled in just one year - up 138%. Also pleasing for shareholders was the 51% gain in the last three months. This could be related to the recent financial results, released recently - you can catch up on the most recent data by reading our company report. Note that businesses generally develop over the long term, so the returns over the last year might not reflect a long term trend.
Because Senmiao Technology 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. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Senmiao Technology actually shrunk its revenue over the last year, with a reduction of 45%. We're a little surprised to see the share price pop 138% in the last year. This is a good example of how buyers can push up prices even before the fundamental metrics show much growth. It's quite likely the revenue fall was already priced in, anyway.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free interactive report on Senmiao Technology's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
Senmiao Technology shareholders should be happy with the total gain of 138% over the last twelve months. A substantial portion of that gain has come in the last three months, with the stock up 51% in that time. Demand for the stock from multiple parties is pushing the price higher; it could be that word is getting out about its virtues as a business. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 4 warning signs for Senmiao Technology you should be aware of, and 2 of them are significant.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
This article by Simply Wall St is general in nature. 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.
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