As an investor, mistakes are inevitable. But really bad investments should be rare. So spare a thought for the long term shareholders of Aurora Mobile Limited (NASDAQ:JG); the share price is down a whopping 72% in the last three years. That would certainly shake our confidence in the decision to own the stock. Furthermore, it's down 49% in about a quarter. That's not much fun for holders.
Because Aurora Mobile 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. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Over the last three years, Aurora Mobile's revenue dropped 1.2% per year. That's not what investors generally want to see. Having said that the 20% annualized share price decline highlights the risk of investing in unprofitable companies. We're generally averse to companies with declining revenues, but we're not alone in that. Don't let a share price decline ruin your calm. You make better decisions when you're calm.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Take a more thorough look at Aurora Mobile's financial health with this free report on its balance sheet.
A Different Perspective
Aurora Mobile shareholders are up 21% for the year. It's always nice to make money but this return falls short of the market return which was about 40% for the year. The silver lining is that the recent rise is far preferable to the annual loss of 20% that shareholders have suffered over the last three years. We hope the turnaround in fortunes continues. It's always interesting to track share price performance over the longer term. But to understand Aurora Mobile better, we need to consider many other factors. For instance, we've identified 2 warning signs for Aurora Mobile that you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
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. 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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