The one-year earnings decline has likely contributed toPexip Holding's (OB:PEXIP) shareholders losses of 55% over that period

Investing in stocks comes with the risk that the share price will fall. Unfortunately, shareholders of Pexip Holding ASA (OB:PEXIP) have suffered share price declines over the last year. The share price is down a hefty 55% in that time. Pexip Holding may have better days ahead, of course; we've only looked at a one year period. Furthermore, it's down 45% in about a quarter. That's not much fun for holders.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

View our latest analysis for Pexip Holding

Pexip Holding isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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.

Pexip Holding grew its revenue by 36% over the last year. We think that is pretty nice growth. Unfortunately it seems investors wanted more, because the share price is down 55% in that time. It is of course possible that the business will still deliver strong growth, it will just take longer than expected to do it. For us it's important to consider when you think a company will become profitable, if you're basing your valuation on revenue.

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

It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. If you are thinking of buying or selling Pexip Holding stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

While Pexip Holding shareholders are down 55% for the year, the market itself is up 15%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The share price decline has continued throughout the most recent three months, down 45%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. 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 Pexip Holding , and understanding them should be part of your investment process.

Pexip Holding is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on NO 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.