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 DropCar, Inc. (NASDAQ:DCAR) shareholders if they were still in shock after the stock dropped like a lead balloon, down 85% in just one year. A loss like this is a stark reminder that portfolio diversification is important. Because DropCar hasn't been listed for many years, the market is still learning about how the business performs. Shareholders have had an even rougher run lately, with the share price down 47% in the last 90 days.
We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.
Given that DropCar 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
DropCar grew its revenue by 2.7% over the last year. While that may seem decent it isn't great considering the company is still making a loss. Nonetheless, it's fair to say the 85% share price implosion is unexpected.. We'd venture this growth was too low to give holders confidence that profitability is on the horizon. But if it will make money, albeit later than previously believed, this could be an opportunity.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
This free interactive report on DropCar's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Given that the market gained 5.5% in the last year, DropCar shareholders might be miffed that they lost 85%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock down 47% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. You could get a better understanding of DropCar's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
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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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.