Some stocks are best avoided. We really hate to see fellow investors lose their hard-earned money. Spare a thought for those who held LiveXLive Media, Inc. (NASDAQ:LIVX) for five whole years - as the share price tanked 79%. And some of the more recent buyers are probably worried, too, with the stock falling 77% in the last year. Shareholders have had an even rougher run lately, with the share price down 27% in the last 90 days. Of course, this share price action may well have been influenced by the 29% decline in the broader market, throughout the period.
Because LiveXLive Media made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. 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 five years, LiveXLive Media grew its revenue at 66% per year. That's better than most loss-making companies. So on the face of it we're really surprised to see the share price has averaged a fall of 27% each year, in the same time period. You'd have to assume the market is worried that profits won't come soon enough. While there might be an opportunity here, you'd want to take a close look at the balance sheet strength.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Take a more thorough look at LiveXLive Media's financial health with this free report on its balance sheet.
A Different Perspective
While the broader market lost about 17% in the twelve months, LiveXLive Media shareholders did even worse, losing 77%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 27% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 5 warning signs with LiveXLive Media (at least 1 which can't be ignored) , and understanding them should be part of your investment process.
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 US exchanges.
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.
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.