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Shareholders in ACV Auctions (NASDAQ:ACVA) have lost 55%, as stock drops 9.8% this past week

·3 min read

While not a mind-blowing move, it is good to see that the ACV Auctions Inc. (NASDAQ:ACVA) share price has gained 19% in the last three months. But that's not enough to compensate for the decline over the last twelve months. During that time the share price has sank like a stone, descending 55%. It's not that amazing to see a bounce after a drop like that. It may be that the fall was an overreaction.

If the past week is anything to go by, investor sentiment for ACV Auctions isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

Check out our latest analysis for ACV Auctions

ACV Auctions 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.

ACV Auctions grew its revenue by 43% over the last year. We think that is pretty nice growth. Meanwhile, the share price tanked 55%, suggesting the market had much higher expectations. It may well be that the business remains approximately on track, but its revenue growth has simply been delayed. For us it's important to consider when you think a company will become profitable, if you're basing your valuation on revenue.

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

ACV Auctions is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

We doubt ACV Auctions shareholders are happy with the loss of 55% over twelve months. That falls short of the market, which lost 20%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. It's great to see a nice little 19% rebound in the last three months. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). If you would like to research ACV Auctions in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

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.

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

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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