Frontier Digital Ventures (ASX:FDV shareholders incur further losses as stock declines 11% this week, taking five-year losses to 71%

Explore Frontier Digital Ventures's Fair Values from the Community and select yours

While not a mind-blowing move, it is good to see that the Frontier Digital Ventures Limited (ASX:FDV) share price has gained 22% in the last three months. But that doesn't change the fact that the returns over the last half decade have been stomach churning. Like a ship taking on water, the share price has sunk 71% in that time. The recent bounce might mean the long decline is over, but we are not confident. The real question is whether the business can leave its past behind and improve itself over the years ahead.

Since Frontier Digital Ventures has shed AU$17m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

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Frontier Digital Ventures wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally hope to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

Over five years, Frontier Digital Ventures grew its revenue at 28% per year. That's better than most loss-making companies. So on the face of it we're really surprised to see the share price has averaged a fall of 11% each year, in the same time period. You'd have to assume the market is worried that profits won't come soon enough. While there might be an opportunity here, you'd want to take a close look at the balance sheet strength.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. This free report showing analyst forecasts should help you form a view on Frontier Digital Ventures

A Different Perspective

While the broader market gained around 16% in the last year, Frontier Digital Ventures shareholders lost 14%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, longer term shareholders are suffering worse, given the loss of 11% doled out over the last five years. We'd need to see some sustained improvements in the key metrics before we could muster much enthusiasm. It's always interesting to track share price performance over the longer term. But to understand Frontier Digital Ventures better, we need to consider many other factors. Even so, be aware that Frontier Digital Ventures is showing 2 warning signs in our investment analysis , you should know about...

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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Australian 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.