Further weakness as OneConnect Financial Technology (NYSE:OCFT) drops 7.3% this week, taking one-year losses to 90%

By
Simply Wall St
Published
January 10, 2022
NYSE:OCFT
Source: Shutterstock

Even the best investor on earth makes unsuccessful investments. But serious investors should think long and hard about avoiding extreme losses. It must have been painful to be a OneConnect Financial Technology Co., Ltd. (NYSE:OCFT) shareholder over the last year, since the stock price plummeted 90% in that time. That'd be enough to make even the strongest stomachs churn. OneConnect Financial Technology may have better days ahead, of course; we've only looked at a one year period. Furthermore, it's down 40% in about a quarter. That's not much fun for holders. We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

Check out our latest analysis for OneConnect Financial Technology

OneConnect Financial Technology isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last twelve months, OneConnect Financial Technology increased its revenue by 31%. We think that is pretty nice growth. Unfortunately, the market wanted something better, given it sent the share price 90% lower during the year. One fear might be that the company might be losing too much money and will need to raise more. We'd posit that the future looks challenging, given the disconnect between revenue growth and the share price.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth
NYSE:OCFT Earnings and Revenue Growth January 10th 2022

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

While OneConnect Financial Technology shareholders are down 90% for the year, the market itself is up 15%. 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. With the stock down 40% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with OneConnect Financial Technology , and understanding them should be part of your investment process.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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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