Shareholders in New Silkroad Culturaltainment (HKG:472) have lost 69%, as stock drops 16% this past week

We think intelligent long term investing is the way to go. But no-one is immune from buying too high. To wit, the New Silkroad Culturaltainment Limited (HKG:472) share price managed to fall 69% over five long years. That's an unpleasant experience for long term holders. Furthermore, it's down 18% in about a quarter. That's not much fun for holders.

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

See our latest analysis for New Silkroad Culturaltainment

Because New Silkroad Culturaltainment made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally hope to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

In the last half decade, New Silkroad Culturaltainment saw its revenue increase by 16% per year. That's well above most other pre-profit companies. Unfortunately for shareholders the share price has dropped 11% per year - disappointing considering the growth. It's safe to say investor expectations are more grounded now. Given the revenue growth we'd consider the stock to be quite an interesting prospect if the company has a clear path to profitability.

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

Take a more thorough look at New Silkroad Culturaltainment's financial health with this free report on its balance sheet.

A Different Perspective

While the broader market gained around 26% in the last year, New Silkroad Culturaltainment shareholders lost 19%. 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. Unfortunately, longer term shareholders are suffering worse, given the loss of 11% doled out over the last five years. We'd need to see some sustained improvements in the key metrics before we could muster much enthusiasm. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with New Silkroad Culturaltainment (at least 1 which is potentially serious) , and understanding them should be part of your investment process.

But note: New Silkroad Culturaltainment 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 Hong Kong 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.