Zhejiang Furun Digital TechnologyLTD (SHSE:600070 investor three-year losses grow to 90% as the stock sheds CN¥61m this past week

Every investor on earth makes bad calls sometimes. But really big losses can really drag down an overall portfolio. So spare a thought for the long term shareholders of Zhejiang Furun Digital Technology CO.,LTD (SHSE:600070); the share price is down a whopping 90% in the last three years. That would certainly shake our confidence in the decision to own the stock. The more recent news is of little comfort, with the share price down 68% in a year. Shareholders have had an even rougher run lately, with the share price down 52% in the last 90 days. We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.

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

See our latest analysis for Zhejiang Furun Digital TechnologyLTD

Given that Zhejiang Furun Digital TechnologyLTD 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 fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Over the last three years, Zhejiang Furun Digital TechnologyLTD's revenue dropped 108% per year. That means its revenue trend is very weak compared to other loss making companies. And as you might expect the share price has been weak too, dropping at a rate of 24% per year. Never forget that loss making companies with falling revenue can and do cause losses for everyday investors. It's worth remembering that investors call buying a steeply falling share price 'catching a falling knife' because it is a dangerous pass time.

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 Zhejiang Furun Digital TechnologyLTD's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

We regret to report that Zhejiang Furun Digital TechnologyLTD shareholders are down 68% for the year. Unfortunately, that's worse than the broader market decline of 14%. 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 14% 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. It's always interesting to track share price performance over the longer term. But to understand Zhejiang Furun Digital TechnologyLTD better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Zhejiang Furun Digital TechnologyLTD you should be aware of, and 2 of them are potentially serious.

For those who like to find winning investments this free list of undervalued 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 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com