Tattooed Chef (NASDAQ:TTCF) dips 27% this week as increasing losses might not be inspiring confidence among its investors
Even the best investor on earth makes unsuccessful investments. But it's not unreasonable to try to avoid truly shocking capital losses. We wouldn't blame Tattooed Chef, Inc. (NASDAQ:TTCF) shareholders if they were still in shock after the stock dropped like a lead balloon, down 90% in just one year. That'd be enough to make even the strongest stomachs churn. We note that it has not been easy for shareholders over three years, either; the share price is down 88% in that time. The falls have accelerated recently, with the share price down 68% in the last three months. While a drop like that is definitely a body blow, money isn't as important as health and happiness.
Since Tattooed Chef has shed US$37m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.
See our latest analysis for Tattooed Chef
Given that Tattooed Chef didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Tattooed Chef grew its revenue by 19% over the last year. That's definitely a respectable growth rate. However, it seems like the market wanted more, since the share price is down 90%. One fear might be that the company might be losing too much money and will need to raise more. We'd posit that the future looks challenging, given the disconnect between revenue growth and the share price.
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 Tattooed Chef's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Tattooed Chef shareholders are down 90% for the year, falling short of the market return. The market shed around 8.4%, no doubt weighing on the stock price. The three-year loss of 23% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Tattooed Chef is showing 3 warning signs in our investment analysis , and 1 of those is a bit concerning...
We will like Tattooed Chef better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, 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.
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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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