The one-year shareholder returns and company earnings persist lower as Alibaba Group Holding (NYSE:BABA) stock falls a further 7.3% in past week

The nature of investing is that you win some, and you lose some. And unfortunately for Alibaba Group Holding Limited (NYSE:BABA) shareholders, the stock is a lot lower today than it was a year ago. In that relatively short period, the share price has plunged 60%. To make matters worse, the returns over three years have also been really disappointing (the share price is 49% lower than three years ago). Furthermore, it's down 22% in about a quarter. That's not much fun for holders. But this could be related to the weak market, which is down 9.8% in the same period.

With the stock having lost 7.3% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

See our latest analysis for Alibaba Group Holding

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Unfortunately Alibaba Group Holding reported an EPS drop of 59% for the last year. Remarkably, he share price decline of 60% per year is particularly close to the EPS drop. Given the lower EPS we might have expected investors to lose confidence in the stock, but that doesn't seemed to have happened. Rather, the share price has approximately tracked EPS growth.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

Dive deeper into Alibaba Group Holding's key metrics by checking this interactive graph of Alibaba Group Holding's earnings, revenue and cash flow.

A Different Perspective

We regret to report that Alibaba Group Holding shareholders are down 60% for the year. Unfortunately, that's worse than the broader market decline of 8.4%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 5% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Alibaba Group Holding better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for Alibaba Group Holding you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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.