Introducing KNK Holdings (HKG:8039), The Stock That Tanked 75%
As every investor would know, you don't hit a homerun every time you swing. But it should be a priority to avoid stomach churning catastrophes, wherever possible. So spare a thought for the long term shareholders of KNK Holdings Limited (HKG:8039); the share price is down a whopping 75% in the last twelve months. That'd be enough to make even the strongest stomachs churn. However, the longer term returns haven't been so bad, with the stock down 11% in the last three years. More recently, the share price has dropped a further 22% in a month.
See our latest analysis for KNK Holdings
KNK Holdings 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. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
KNK Holdings's revenue didn't grow at all in the last year. In fact, it fell 51%. If you think that's a particularly bad result, you're statistically on the money The market didn't mess around, sending shares down the garbage shute. (Or down 75% to be specific). Our mindset doesn't have a lot of time for stocks like this. A healthy aversion to bagholding (holding potentially worthless stocks) sees many shareholders avoid buying shares like this, rightly or wrongly.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Take a more thorough look at KNK Holdings's financial health with this free report on its balance sheet.
A Different Perspective
The last twelve months weren't great for KNK Holdings shares, which performed worse than the market, costing holders 75%. The market shed around 18%, no doubt weighing on the stock price. The three-year loss of 3.3% 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. 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. It's always interesting to track share price performance over the longer term. But to understand KNK Holdings better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for KNK Holdings (of which 1 can't be ignored!) you should know about.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.
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.
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. Thank you for reading.
