Further weakness as Focused Photonics (Hangzhou) (SZSE:300203) drops 7.9% this week, taking one-year losses to 51%

Investing in stocks comes with the risk that the share price will fall. Anyone who held Focused Photonics (Hangzhou), Inc. (SZSE:300203) over the last year knows what a loser feels like. The share price is down a hefty 51% in that time. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 6.4% in three years. The falls have accelerated recently, with the share price down 13% in the last three months.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

Check out our latest analysis for Focused Photonics (Hangzhou)

Given that Focused Photonics (Hangzhou) 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. Shareholders of unprofitable companies usually desire strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In just one year Focused Photonics (Hangzhou) saw its revenue fall by 7.7%. That looks pretty grim, at a glance. The share price drop of 51% is understandable given the company doesn't have profits to boast of. Having said that, if growth is coming in the future, the stock may have better days ahead. We have a natural aversion to companies that are losing money and shrinking revenue. But perhaps that is being too careful.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

This free interactive report on Focused Photonics (Hangzhou)'s balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market lost about 9.1% in the twelve months, Focused Photonics (Hangzhou) shareholders did even worse, losing 51%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 8% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that Focused Photonics (Hangzhou) is showing 1 warning sign in our investment analysis , you should know about...

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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