Taking the occasional loss comes part and parcel with investing on the stock market. Anyone who held Readly International AB (publ) (STO:READ) over the last year knows what a loser feels like. The share price is down a hefty 60% in that time. Because Readly International hasn't been listed for many years, the market is still learning about how the business performs. Shareholders have had an even rougher run lately, with the share price down 36% in the last 90 days.
With the stock having lost 12% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.
Because Readly International 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. Shareholders of unprofitable companies usually expect strong revenue growth. 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.
Readly International grew its revenue by 33% over the last year. We think that is pretty nice growth. Unfortunately it seems investors wanted more, because the share price is down 60% in that time. It may well be that the business remains approximately on track, but its revenue growth has simply been delayed. For us it's important to consider when you think a company will become profitable, if you're basing your valuation on revenue.
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 Readly International's financial health with this free report on its balance sheet.
A Different Perspective
Given that the market gained 40% in the last year, Readly International shareholders might be miffed that they lost 60%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. The share price decline has continued throughout the most recent three months, down 36%, 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. It's always interesting to track share price performance over the longer term. But to understand Readly International better, we need to consider many other factors. For instance, we've identified 2 warning signs for Readly International (1 is a bit unpleasant) that you should be aware of.
We will like Readly International better if we see some big insider buys. While we wait, check out this free list of growing companies 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 SE exchanges.
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.
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