Would Shareholders Who Purchased MoneyMe's (ASX:MME) Stock Year Be Happy With The Share price Today?

It's easy to match the overall market return by buying an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. That downside risk was realized by MoneyMe Limited (ASX:MME) shareholders over the last year, as the share price declined 16%. That's disappointing when you consider the market declined 2.8%. MoneyMe may have better days ahead, of course; we've only looked at a one year period. It's down 1.6% in the last seven days.

Check out our latest analysis for MoneyMe

Given that MoneyMe only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.

MoneyMe grew its revenue by 69% over the last year. That's a strong result which is better than most other loss making companies. Given the revenue growth, the share price drop of 16% seems quite harsh. Our sympathies to shareholders who are now underwater. Prima facie, revenue growth like that should be a good thing, so it's worth checking whether losses have stabilized. Our brains have evolved to think in linear fashion, so there's value in learning to recognize exponential growth. We are, in some ways, simply the wisest of the monkeys.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. You can see what analysts are predicting for MoneyMe in this interactive graph of future profit estimates.

A Different Perspective

While MoneyMe shareholders are down 16% for the year, the market itself is up 2.8%. 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. Putting aside the last twelve months, it's good to see the share price has rebounded by 3.1%, in the last ninety days. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). It's always interesting to track share price performance over the longer term. But to understand MoneyMe better, we need to consider many other factors. Take risks, for example - MoneyMe has 2 warning signs (and 1 which is a bit concerning) we think you should know about.

MoneyMe 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 AU exchanges.

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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.
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