Red phase (SZSE:300427 shareholders incur further losses as stock declines 12% this week, taking five-year losses to 63%

Generally speaking long term investing is the way to go. But unfortunately, some companies simply don't succeed. For example the Red phase INC. (SZSE:300427) share price dropped 64% over five years. We certainly feel for shareholders who bought near the top. More recently, the share price has dropped a further 25% in a month.

With the stock having lost 12% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

View our latest analysis for Red phase

Red phase isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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.

Over half a decade Red phase reduced its trailing twelve month revenue by 5.8% for each year. While far from catastrophic that is not good. With neither profit nor revenue growth, the loss of 10% per year doesn't really surprise us. We don't think anyone is rushing to buy this stock. Ultimately, it may be worth watching - should revenue pick up, the share price might follow.

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

If you are thinking of buying or selling Red phase stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Investors in Red phase had a tough year, with a total loss of 15%, against a market gain of about 6.1%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. However, the loss over the last year isn't as bad as the 10% per annum loss investors have suffered over the last half decade. We'd need to see some sustained improvements in the key metrics before we could muster much enthusiasm. It's always interesting to track share price performance over the longer term. But to understand Red phase better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Red phase (at least 2 which don't sit too well with us) , and understanding them should be part of your investment process.

But note: Red phase may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.