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Did Changing Sentiment Drive True Leaf Brands's (CNSX:MJ) Share Price Down A Worrying 70%?

Simply Wall St

Taking the occasional loss comes part and parcel with investing on the stock market. Unfortunately, shareholders of True Leaf Brands Inc. (CNSX:MJ) have suffered share price declines over the last year. In that relatively short period, the share price has plunged 70%. We note that it has not been easy for shareholders over three years, either; the share price is down 31% in that time. The falls have accelerated recently, with the share price down 49% in the last three months. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.

View our latest analysis for True Leaf Brands

True Leaf Brands isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

True Leaf Brands grew its revenue by 38% over the last year. That's definitely a respectable growth rate. Unfortunately it seems investors wanted more, because the share price is down 70% in that time. It may well be that the business remains approximately on track, but its revenue growth has simply been delayed. To our minds it isn't enough to just look at revenue, anyway. Always consider when profits will flow.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

CNSX:MJ Income Statement, December 4th 2019

Take a more thorough look at True Leaf Brands's financial health with this free report on its balance sheet.

A Different Perspective

The last twelve months weren't great for True Leaf Brands shares, which cost holders 70%, while the market was up about 11%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Shareholders have lost 12% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. Before spending more time on True Leaf Brands it might be wise to click here to see if insiders have been buying or selling shares.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.