Bitcoin Depot Inc.'s (NASDAQ:BTM) 46% Dip In Price Shows Sentiment Is Matching Revenues

Unfortunately for some shareholders, the Bitcoin Depot Inc. (NASDAQ:BTM) share price has dived 46% in the last thirty days, prolonging recent pain. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 28% in that time.

After such a large drop in price, Bitcoin Depot's price-to-sales (or "P/S") ratio of 0.2x might make it look like a buy right now compared to the Commercial Services industry in the United States, where around half of the companies have P/S ratios above 1.1x and even P/S above 4x are quite common. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

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Check out our latest analysis for Bitcoin Depot

How Bitcoin Depot Has Been Performing

Bitcoin Depot's revenue growth of late has been pretty similar to most other companies. Perhaps the market is expecting future revenue performance to dive, which has kept the P/S suppressed. Those who are bullish on Bitcoin Depot will be hoping that this isn't the case.

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Do Revenue Forecasts Match The Low P/S Ratio?

There's an inherent assumption that a company should underperform the industry for P/S ratios like Bitcoin Depot's to be considered reasonable.

Retrospectively, the last year delivered a decent 8.6% gain to the company's revenues. However, this wasn't enough as the latest three year period has seen an unpleasant 2.1% overall drop in revenue. Therefore, it's fair to say the revenue growth recently has been undesirable for the company.

Turning to the outlook, the next year should bring diminished returns, with revenue decreasing 10% as estimated by the three analysts watching the company. Meanwhile, the broader industry is forecast to expand by 5.5%, which paints a poor picture.

With this information, we are not surprised that Bitcoin Depot is trading at a P/S lower than the industry. Nonetheless, there's no guarantee the P/S has reached a floor yet with revenue going in reverse. There's potential for the P/S to fall to even lower levels if the company doesn't improve its top-line growth.

What We Can Learn From Bitcoin Depot's P/S?

Bitcoin Depot's P/S has taken a dip along with its share price. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

It's clear to see that Bitcoin Depot maintains its low P/S on the weakness of its forecast for sliding revenue, as expected. As other companies in the industry are forecasting revenue growth, Bitcoin Depot's poor outlook justifies its low P/S ratio. It's hard to see the share price rising strongly in the near future under these circumstances.

And what about other risks? Every company has them, and we've spotted 3 warning signs for Bitcoin Depot (of which 1 can't be ignored!) you should know about.

If you're unsure about the strength of Bitcoin Depot's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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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.