As every investor would know, you don't hit a homerun every time you swing. But serious investors should think long and hard about avoiding extreme losses. We wouldn't blame MicroPort CardioFlow Medtech Corporation (HKG:2160) shareholders if they were still in shock after the stock dropped like a lead balloon, down 85% in just one year. That'd be enough to make even the strongest stomachs churn. We wouldn't rush to judgement on MicroPort CardioFlow Medtech because we don't have a long term history to look at. Shareholders have had an even rougher run lately, with the share price down 31% in the last 90 days. But this could be related to the weak market, which is down 15% in the same period. We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.
If the past week is anything to go by, investor sentiment for MicroPort CardioFlow Medtech isn't positive, so let's see if there's a mismatch between fundamentals and the share price.
Because MicroPort CardioFlow Medtech 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. 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 year MicroPort CardioFlow Medtech saw its revenue grow by 93%. That's well above most other pre-profit companies. So the hefty 85% share price crash makes us think the company has somehow offended market participants. Something weird is definitely impacting the stock price; we'd venture the company has destroyed value somehow. What is clear is that the market is not judging the company on its revenue growth right now. Of course, markets do over-react so share price drop may be too harsh.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
This free interactive report on MicroPort CardioFlow Medtech's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
We doubt MicroPort CardioFlow Medtech shareholders are happy with the loss of 85% over twelve months. That falls short of the market, which lost 24%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. The share price decline has continued throughout the most recent three months, down 31%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. 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. For example, we've discovered 2 warning signs for MicroPort CardioFlow Medtech that you should be aware of before investing here.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.