Investing in stocks inevitably means buying into some companies that perform poorly. But the last three years have been particularly tough on longer term Prosper One International Holdings Company Limited (HKG:1470) shareholders. Regrettably, they have had to cope with a 52% drop in the share price over that period. And more recent buyers are having a tough time too, with a drop of 47% in the last year. Shareholders have had an even rougher run lately, with the share price down 22% in the last 90 days.
Prosper One International Holdings isn't a profitable company, so 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Over the last three years, Prosper One International Holdings's revenue dropped 6.7% per year. That's not what investors generally want to see. With revenue in decline, and profit but a dream, we can understand why the share price has been declining at 22% per year. Of course, it's the future that will determine whether today's price is a good one. We don't generally like to own companies that lose money and can't grow revenues. But any company is worth looking at when it makes a maiden profit.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
This free interactive report on Prosper One International Holdings's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Prosper One International Holdings shareholders are down 47% for the year, falling short of the market return. Meanwhile, the broader market slid about 6.6%, likely weighing on the stock. Shareholders have lost 22% 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. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.