Poshmark (NASDAQ:POSH shareholders incur further losses as stock declines 20% this week, taking one-year losses to 60%

Investing in stocks comes with the risk that the share price will fall. Unfortunately, shareholders of Poshmark, Inc. (NASDAQ:POSH) have suffered share price declines over the last year. To wit the share price is down 60% in that time. Because Poshmark hasn't been listed for many years, the market is still learning about how the business performs. The last week also saw the share price slip down another 20%.

Since Poshmark has shed US$217m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

Before we look at the performance, you might like to know that our analysis indicates that POSH is potentially undervalued!

Given that Poshmark 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. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Poshmark grew its revenue by 15% over the last year. We think that is pretty nice growth. Meanwhile, the share price tanked 60%, suggesting the market had much higher expectations. 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).

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. You can see what analysts are predicting for Poshmark in this interactive graph of future profit estimates.

A Different Perspective

We doubt Poshmark shareholders are happy with the loss of 60% over twelve months. That falls short of the market, which lost 12%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. Putting aside the last twelve months, it's good to see the share price has rebounded by 7.0%, in the last ninety days. This could just be a bounce because the selling was too aggressive, but fingers crossed it's the start of a new trend. It's always interesting to track share price performance over the longer term. But to understand Poshmark better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Poshmark .

But note: Poshmark may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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