Shareholders in Eqonex (NASDAQ:EQOS) are in the red if they invested a year ago
The art and science of stock market investing requires a tolerance for losing money on some of the shares you buy. But serious investors should think long and hard about avoiding extreme losses. It must have been painful to be a Eqonex Limited (NASDAQ:EQOS) shareholder over the last year, since the stock price plummeted 89% in that time. While some investors are willing to stomach this sort of loss, they are usually professionals who spread their bets thinly. Because Eqonex hasn't been listed for many years, the market is still learning about how the business performs. Furthermore, it's down 42% in about a quarter. That's not much fun for holders. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report. We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.
Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.
Check out our latest analysis for Eqonex
Because Eqonex 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. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last twelve months, Eqonex increased its revenue by 1,041%. That's well above most other pre-profit companies. So on the face of it we're really surprised to see the share price down 89% over twelve months. There's clearly something unusual going on here such as an acquisition that hasn't delivered expected profits. What is clear is that the market is not judging the company on its revenue growth right now. Of course, markets do over-react so share price drop may be too harsh.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
This free interactive report on Eqonex's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
We doubt Eqonex shareholders are happy with the loss of 89% over twelve months. That falls short of the market, which lost 3.8%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. With the stock down 42% over the last three months, the market doesn't seem to believe that the company has solved all its problems. 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 Eqonex better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 5 warning signs for Eqonex (of which 1 is a bit unpleasant!) you should know about.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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.
