Further weakness as Phoenix Media Investment (Holdings) (HKG:2008) drops 12% this week, taking five-year losses to 65%

By
Simply Wall St
Published
November 19, 2021
SEHK:2008
Source: Shutterstock

Generally speaking long term investing is the way to go. But that doesn't mean long term investors can avoid big losses. Zooming in on an example, the Phoenix Media Investment (Holdings) Limited (HKG:2008) share price dropped 67% in the last half decade. That's an unpleasant experience for long term holders. Shareholders have had an even rougher run lately, with the share price down 19% in the last 90 days.

Since Phoenix Media Investment (Holdings) has shed HK$350m 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 Phoenix Media Investment (Holdings)

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

We know that Phoenix Media Investment (Holdings) has been profitable in the past. On the other hand, it reported a trailing twelve months loss, suggesting it isn't reliably profitable. Other metrics might give us a better handle on how its value is changing over time.

It could be that the revenue decline of 4.5% per year is viewed as evidence that Phoenix Media Investment (Holdings) is shrinking. That could explain the weak share price.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
SEHK:2008 Earnings and Revenue Growth November 19th 2021

Take a more thorough look at Phoenix Media Investment (Holdings)'s financial health with this free report on its balance sheet.

A Different Perspective

We're pleased to report that Phoenix Media Investment (Holdings) shareholders have received a total shareholder return of 52% over one year. That certainly beats the loss of about 11% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. 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. Case in point: We've spotted 2 warning signs for Phoenix Media Investment (Holdings) you should be aware of, and 1 of them makes us a bit uncomfortable.

Of course Phoenix Media Investment (Holdings) may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.

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