The one-year earnings decline has likely contributed toSezzle's (ASX:SZL) shareholders losses of 71% over that period

It's not a secret that every investor will make bad investments, from time to time. But it's not unreasonable to try to avoid truly shocking capital losses. It must have been painful to be a Sezzle Inc. (ASX:SZL) shareholder over the last year, since the stock price plummeted 71% in that time. That'd be enough to make even the strongest stomachs churn. Because Sezzle hasn't been listed for many years, the market is still learning about how the business performs. Furthermore, it's down 58% in about a quarter. That's not much fun for holders.

If the past week is anything to go by, investor sentiment for Sezzle isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

See our latest analysis for Sezzle

Sezzle 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. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last twelve months, Sezzle increased its revenue by 145%. 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 71% 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 image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. If you are thinking of buying or selling Sezzle stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

While Sezzle shareholders are down 71% for the year, the market itself is up 12%. 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 58%, 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. 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. Take risks, for example - Sezzle has 5 warning signs (and 2 which shouldn't be ignored) we think you should know about.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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. 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.