Earnings growth of 4.6% over 5 years hasn't been enough to translate into positive returns for Wemade Play (KOSDAQ:123420) shareholders

Simply Wall St

It is a pleasure to report that the Wemade Play Co., Ltd. (KOSDAQ:123420) is up 51% in the last quarter. But that is little comfort to those holding over the last half decade, sitting on a big loss. In fact, the share price has declined rather badly, down some 63% in that time. Some might say the recent bounce is to be expected after such a bad drop. Of course, this could be the start of a turnaround.

With the stock having lost 11% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the unfortunate half decade during which the share price slipped, Wemade Play actually saw its earnings per share (EPS) improve by 25% per year. So it doesn't seem like EPS is a great guide to understanding how the market is valuing the stock. Or possibly, the market was previously very optimistic, so the stock has disappointed, despite improving EPS.

Due to the lack of correlation between the EPS growth and the falling share price, it's worth taking a look at other metrics to try to understand the share price movement.

In contrast to the share price, revenue has actually increased by 4.9% a year in the five year period. So it seems one might have to take closer look at the fundamentals to understand why the share price languishes. After all, there may be an opportunity.

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

KOSDAQ:A123420 Earnings and Revenue Growth August 1st 2025

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

A Different Perspective

Wemade Play's TSR for the year was broadly in line with the market average, at 16%. The silver lining is that the share price is up in the short term, which flies in the face of the annualised loss of 10% over the last five years. We're pretty skeptical of turnaround stories, but it's good to see the recent share price recovery. It's always interesting to track share price performance over the longer term. But to understand Wemade Play better, we need to consider many other factors. Case in point: We've spotted 4 warning signs for Wemade Play you should be aware of, and 2 of them make us uncomfortable.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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

Valuation is complex, but we're here to simplify it.

Discover if Wemade Play might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.

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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.