It's not possible to invest over long periods without making some bad investments. But you have a problem if you face massive losses more than once in a while. So consider, for a moment, the misfortune of AdderaCare AB (STO:ADDERA) investors who have held the stock for three years as it declined a whopping 82%. That would be a disturbing experience. And the ride hasn't got any smoother in recent times over the last year, with the price 61% lower in that time. Furthermore, it's down 57% in about a quarter. That's not much fun for holders. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.

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.

View our latest analysis for AdderaCare

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. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

AdderaCare saw its share price decline over the three years in which its EPS also dropped, falling to a loss. Since the company has fallen to a loss making position, it's hard to compare the change in EPS with the share price change. But it's safe to say we'd generally expect the share price to be lower as a result!

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

It might be well worthwhile taking a look at our free report on AdderaCare's earnings, revenue and cash flow.

A Different Perspective

AdderaCare shareholders are down 61% for the year, falling short of the market return. The market shed around 4.0%, no doubt weighing on the stock price. Shareholders have lost 43% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. It's always interesting to track share price performance over the longer term. But to understand AdderaCare better, we need to consider many other factors. Take risks, for example - AdderaCare has 5 warning signs (and 2 which shouldn't be ignored) we think you should know about.