Further weakness as Whole Shine Medical Technology (SZSE:002622) drops 14% this week, taking three-year losses to 67%

Investing in stocks inevitably means buying into some companies that perform poorly. But the long term shareholders of Whole Shine Medical Technology Co., Ltd. (SZSE:002622) have had an unfortunate run in the last three years. Unfortunately, they have held through a 67% decline in the share price in that time. And over the last year the share price fell 47%, so we doubt many shareholders are delighted. The falls have accelerated recently, with the share price down 23% in the last three months.

Since Whole Shine Medical Technology has shed CN¥244m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Whole Shine Medical Technology

Given that Whole Shine Medical Technology 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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.

In the last three years, Whole Shine Medical Technology saw its revenue grow by 62% per year, compound. That is faster than most pre-profit companies. In contrast, the share price is down 19% compound, over three years - disappointing by most standards. This could mean hype has come out of the stock because the losses are concerning investors. But a share price drop of that magnitude could well signal that the market is overly negative on the stock.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

While the broader market lost about 10% in the twelve months, Whole Shine Medical Technology shareholders did even worse, losing 47%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. 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 Whole Shine Medical Technology is showing 1 warning sign 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 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.