Planet Labs PBC (NYSE:PL shareholders incur further losses as stock declines 10% this week, taking one-year losses to 20%
It's easy to match the overall market return by buying an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. That downside risk was realized by Planet Labs PBC (NYSE:PL) shareholders over the last year, as the share price declined 20%. That's well below the market decline of 10%. Because Planet Labs PBC 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 17% in the last three months.
With the stock having lost 10% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.
View our latest analysis for Planet Labs PBC
Because Planet Labs PBC 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 it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last year Planet Labs PBC saw its revenue grow by 41%. That's definitely a respectable growth rate. Unfortunately that wasn't good enough to stop the share price dropping 20%. This implies the market was expecting better growth. However, that's in the past now, and it's the future that matters most.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Take a more thorough look at Planet Labs PBC's financial health with this free report on its balance sheet.
A Different Perspective
Planet Labs PBC shareholders are down 20% for the year, even worse than the market loss of 10%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. The share price decline has continued throughout the most recent three months, down 17%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. 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 2 warning signs with Planet Labs PBC , and understanding them should be part of your investment process.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American 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.
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