REC Silicon (OB:RECSI shareholders incur further losses as stock declines 37% this week, taking three-year losses to 69%

Investing in stocks inevitably means buying into some companies that perform poorly. But the long term shareholders of REC Silicon ASA (OB:RECSI) have had an unfortunate run in the last three years. So they might be feeling emotional about the 69% share price collapse, in that time. And the ride hasn't got any smoother in recent times over the last year, with the price 66% lower in that time. Unfortunately the share price momentum is still quite negative, with prices down 45% in thirty days.

Since REC Silicon has shed kr1.2b from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

Check out our latest analysis for REC Silicon

Because REC Silicon 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. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last three years, REC Silicon saw its revenue grow by 1.7% per year, compound. That's not a very high growth rate considering it doesn't make profits. This uninspiring revenue growth has no doubt helped send the share price lower; it dropped 19% during the period. It can be well worth keeping an eye on growth stocks that disappoint the market, because sometimes they re-accelerate. After all, growing a business isn't easy, and the process will not always be smooth.

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

Take a more thorough look at REC Silicon's financial health with this free report on its balance sheet.

A Different Perspective

Investors in REC Silicon had a tough year, with a total loss of 66%, against a market gain of about 7.9%. 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. On the bright side, long term shareholders have made money, with a gain of 10% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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 3 warning signs for REC Silicon you should be aware of, and 2 of them shouldn't be ignored.

We will like REC Silicon better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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