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Imagine Owning Classified Group (Holdings) (HKG:8232) And Trying To Stomach The 80% Share Price Drop

Simply Wall St

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It's not a secret that every investor will make bad investments, from time to time. But it's not unreasonable to try to avoid truly shocking capital losses. We wouldn't blame Classified Group (Holdings) Limited (HKG:8232) shareholders if they were still in shock after the stock dropped like a lead balloon, down 80% in just one year. While some investors are willing to stomach this sort of loss, they are usually professionals who spread their bets thinly. We wouldn't rush to judgement on Classified Group (Holdings) because we don't have a long term history to look at. The falls have accelerated recently, with the share price down 26% in the last three months.

While a drop like that is definitely a body blow, money isn't as important as health and happiness.

View our latest analysis for Classified Group (Holdings)

Classified Group (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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In just one year Classified Group (Holdings) saw its revenue fall by 6.6%. That's not what investors generally want to see. The market obviously agrees, since the share price tanked 80%. That's a stern reminder that profitless companies need to grow the top line, at the very least. But markets do over-react, so there opportunity for investors who are willing to take the time to dig deeper and understand the business.

Depicted in the graphic below, you'll see revenue and earnings over time. If you want more detail, you can click on the chart itself.

SEHK:8232 Income Statement, June 13th 2019

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. It might be well worthwhile taking a look at our free report on Classified Group (Holdings)'s earnings, revenue and cash flow.

A Different Perspective

Classified Group (Holdings) shareholders are down 80% for the year, even worse than the market loss of 13%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. The share price decline has continued throughout the most recent three months, down 26%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of Classified Group (Holdings) by clicking this link.

Classified Group (Holdings) is not the only stock that insiders are buying. 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 HK exchanges.

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.

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. Thank you for reading.