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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. So spare a thought for the long term shareholders of Matterport, Inc. (NASDAQ:MTTR); the share price is down a whopping 74% in the last twelve months. A loss like this is a stark reminder that portfolio diversification is important. Because Matterport hasn't been listed for many years, the market is still learning about how the business performs. The falls have accelerated recently, with the share price down 40% in the last three months.
With the stock having lost 24% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.
Matterport 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 it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Matterport grew its revenue by 13% 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 74% share price implosion is unexpected.. Clearly the market was expecting better, and this may blow out projections of profitability. If and only if this company is still likely to succeed, just a little slower, this could be a good opportunity.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
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. So it makes a lot of sense to check out what analysts think Matterport will earn in the future (free profit forecasts).
A Different Perspective
Matterport shareholders are down 74% for the year, even worse than the market loss of 16%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. With the stock down 40% 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example - Matterport has 3 warning signs (and 1 which is potentially serious) we think you should know about.
Matterport is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.