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Neonode Inc. (NASDAQ:NEON) shareholders might be concerned after seeing the share price drop 26% in the last quarter. But that doesn't change the fact that the returns over the last year have been spectacular. Indeed, the share price is up a whopping 447% in that time. Arguably, the recent fall is to be expected after such a strong rise. Of course, winners often do keep winning, so there may be more gains to come (if the business fundamentals stack up).
Neonode wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. 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.
Neonode actually shrunk its revenue over the last year, with a reduction of 30%. This is in stark contrast to the splendorous stock price, which has rocketed 447% since this time a year ago. There can be no doubt this kind of decoupling of revenue growth and share price growth is unusual to see in loss making companies. While this gain looks like speculative buying to us, sometimes speculation pays off.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
Take a more thorough look at Neonode's financial health with this free report on its balance sheet.
A Different Perspective
We're pleased to report that Neonode shareholders have received a total shareholder return of 447% over one year. That certainly beats the loss of about 11% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand Neonode better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Neonode , and understanding them should be part of your investment process.
We will like Neonode better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
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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