Chicken Soup for the Soul Entertainment (NASDAQ:CSSE) investors are sitting on a loss of 63% if they invested a year ago

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The nature of investing is that you win some, and you lose some. Unfortunately, shareholders of Chicken Soup for the Soul Entertainment, Inc. (NASDAQ:CSSE) have suffered share price declines over the last year. To wit the share price is down 63% in that time. To make matters worse, the returns over three years have also been really disappointing (the share price is 34% lower than three years ago). Furthermore, it's down 29% in about a quarter. That's not much fun for holders.

It's worthwhile assessing if the company's economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let's do just that.

See our latest analysis for Chicken Soup for the Soul Entertainment

Chicken Soup for the Soul Entertainment 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. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

Chicken Soup for the Soul Entertainment grew its revenue by 85% over the last year. That's well above most other pre-profit companies. Meanwhile, the share price slid 63%. This could mean hype has come out of the stock because the bottom line is concerning investors. We'd definitely consider it a positive if the company is trending towards profitability. If you can see that happening, then perhaps consider adding this stock to your watchlist.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth
NasdaqGM:CSSE Earnings and Revenue Growth December 26th 2022

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized 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. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

While the broader market lost about 22% in the twelve months, Chicken Soup for the Soul Entertainment shareholders did even worse, losing 63%. 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 7% 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 Chicken Soup for the Soul Entertainment better, we need to consider many other factors. For instance, we've identified 2 warning signs for Chicken Soup for the Soul Entertainment that you should be aware of.