Great Chinasoft TechnologyLtd (SZSE:002453 investor one-year losses grow to 70% as the stock sheds CN¥341m this past week

The art and science of stock market investing requires a tolerance for losing money on some of the shares you buy. But it would be foolish to simply accept every extremely large loss as an inevitable part of the game. So spare a thought for the long term shareholders of Great Chinasoft Technology Co.,Ltd. (SZSE:002453); the share price is down a whopping 70% in the last twelve months. That'd be a striking reminder about the importance of diversification. Even if you look out three years, the returns are still disappointing, with the share price down66% in that time. Shareholders have had an even rougher run lately, with the share price down 38% in the last 90 days.

Since Great Chinasoft TechnologyLtd has shed CN¥341m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for Great Chinasoft TechnologyLtd

Given that Great Chinasoft 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. When a company doesn't make profits, we'd generally hope to see good revenue growth. 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.

Great Chinasoft TechnologyLtd's revenue didn't grow at all in the last year. In fact, it fell 71%. If you think that's a particularly bad result, you're statistically on the money If you need more proof of that, check the share price. (Hint: it tanked 70%). This kind of performance makes us wary, and usually gives us reason to forget about a stock. A healthy aversion to bagholding (holding potentially worthless stocks) sees many shareholders avoid buying shares like this, rightly or wrongly.

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

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

While the broader market lost about 17% in the twelve months, Great Chinasoft TechnologyLtd shareholders did even worse, losing 70%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 6% per year over five years. 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. Take risks, for example - Great Chinasoft TechnologyLtd has 2 warning signs (and 1 which is concerning) we think you should know about.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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.