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Reflecting on LMP Automotive Holdings' (NASDAQ:LMPX) Share Price Returns Over The Last Year

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Simply Wall St
·3 min read
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Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. But if you buy individual stocks, you can do both better or worse than that. Investors in LMP Automotive Holdings, Inc. (NASDAQ:LMPX) have tasted that bitter downside in the last year, as the share price dropped 32%. That falls noticeably short of the market return of around 25%. Because LMP Automotive Holdings 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 27% in the last three months.

View our latest analysis for LMP Automotive Holdings

LMP Automotive Holdings isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last year LMP Automotive Holdings saw its revenue grow by 117%. That's well above most other pre-profit companies. Given the revenue growth, the share price drop of 32% seems quite harsh. Our sympathies to shareholders who are now underwater. On the bright side, if this company is moving profits in the right direction, top-line growth like that could be an opportunity. Our monkey brains haven't evolved to think exponentially, so humans do tend to underestimate companies that have exponential growth.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

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

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. It might be well worthwhile taking a look at our free report on LMP Automotive Holdings' earnings, revenue and cash flow.

A Different Perspective

While LMP Automotive Holdings shareholders are down 32% for the year, the market itself is up 25%. 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 27%, 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. It's always interesting to track share price performance over the longer term. But to understand LMP Automotive Holdings better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for LMP Automotive Holdings (of which 2 make us uncomfortable!) you should know about.

LMP Automotive Holdings 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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.