As every investor would know, you don’t hit a homerun every time you swing. But serious investors should think long and hard about avoiding extreme losses. We wouldn’t blame Summit Wireless Technologies, Inc. (NASDAQ:WISA) shareholders if they were still in shock after the stock dropped like a lead balloon, down 79% in just one year. That’d be a striking reminder about the importance of diversification. Because Summit Wireless Technologies 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 30% in the last three months.
View our latest analysis for Summit Wireless Technologies
Summit Wireless Technologies isn’t currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. That’s because it’s hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Summit Wireless Technologies grew its revenue by 43% over the last year. We think that is pretty nice growth. Unfortunately, the market wanted something better, given it sent the share price 79% lower during the year. 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.
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
Given that the market gained 3.5% in the last year, Summit Wireless Technologies shareholders might be miffed that they lost 79%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The share price decline has continued throughout the most recent three months, down 30%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
Of course Summit Wireless Technologies may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.