Elastic (NYSE:ESTC shareholders incur further losses as stock declines 5.2% this week, taking one-year losses to 60%
Investing in stocks comes with the risk that the share price will fall. Anyone who held Elastic N.V. (NYSE:ESTC) over the last year knows what a loser feels like. The share price is down a hefty 60% in that time. However, the longer term returns haven't been so bad, with the stock down 25% in the last three years. Shareholders have had an even rougher run lately, with the share price down 31% in the last 90 days. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.
Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.
Check out our latest analysis for Elastic
Given that Elastic didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. 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.
Elastic grew its revenue by 33% over the last year. We think that is pretty nice growth. Meanwhile, the share price tanked 60%, suggesting the market had much higher expectations. 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.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Elastic is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So it makes a lot of sense to check out what analysts think Elastic will earn in the future (free analyst consensus estimates)
A Different Perspective
The last twelve months weren't great for Elastic shares, which performed worse than the market, costing holders 60%. Meanwhile, the broader market slid about 24%, likely weighing on the stock. The three-year loss of 8% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. 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 risks, for instance. Every company has them, and we've spotted 3 warning signs for Elastic you should know about.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will 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.
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