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Meten EdtechX Education Group (NASDAQ:METX) adds CN¥37m to market cap in the past 7 days, though investors from a year ago are still down 88%

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This month, we saw the Meten EdtechX Education Group Ltd. (NASDAQ:METX) up an impressive 83%. But that isn't much consolation for the painful drop we've seen in the last year. To wit, the stock has dropped 88% over the last year. So the rise may not be much consolation. Only time will tell if the company can sustain the turnaround. 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.

Although the past week has been more reassuring for shareholders, they're still in the red over the last year, so let's see if the underlying business has been responsible for the decline.

Check out our latest analysis for Meten EdtechX Education Group

Meten EdtechX Education Group 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.

Meten EdtechX Education Group's revenue didn't grow at all in the last year. In fact, it fell 18%. That's not what investors generally want to see. The market obviously agrees, since the share price tanked 88%. 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.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth
earnings-and-revenue-growth

If you are thinking of buying or selling Meten EdtechX Education Group stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Given that the market gained 29% in the last year, Meten EdtechX Education Group shareholders might be miffed that they lost 88%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. The share price decline has continued throughout the most recent three months, down 4.6%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. 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. Like risks, for instance. Every company has them, and we've spotted 6 warning signs for Meten EdtechX Education Group (of which 3 make us uncomfortable!) you should know about.

Of course Meten EdtechX Education Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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.

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