Even the best investor on earth makes unsuccessful investments. But it should be a priority to avoid stomach churning catastrophes, wherever possible. So we hope that those who held Genius Sports Limited (NYSE:GENI) during the last year don't lose the lesson, in addition to the 84% hit to the value of their shares. A loss like this is a stark reminder that portfolio diversification is important. Genius Sports may have better days ahead, of course; we've only looked at a one year period. Shareholders have had an even rougher run lately, with the share price down 54% in the last 90 days. While a drop like that is definitely a body blow, money isn't as important as health and happiness.
With the stock having lost 24% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.
Given that Genius Sports didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally expect 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 year Genius Sports saw its revenue grow by 75%. That's a strong result which is better than most other loss making companies. So the hefty 84% share price crash makes us think the company has somehow offended market participants. Something weird is definitely impacting the stock price; we'd venture the company has destroyed value somehow. We'd recommend taking a very close look at the stock (and any available forecasts), before considering a purchase, because the share price is not correlated with the revenue growth, that's for sure. Of course, markets do over-react so share price drop may be too harsh.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
If you are thinking of buying or selling Genius Sports stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
We doubt Genius Sports shareholders are happy with the loss of 84% over twelve months. That falls short of the market, which lost 9.8%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. The share price decline has continued throughout the most recent three months, down 54%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. It's always interesting to track share price performance over the longer term. But to understand Genius Sports better, we need to consider many other factors. Even so, be aware that Genius Sports is showing 3 warning signs in our investment analysis , you should know about...
Of course Genius Sports may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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.