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As an investor, mistakes are inevitable. But you have a problem if you face massive losses more than once in a while. So spare a thought for the long term shareholders of hmvod Limited (HKG:8103); the share price is down a whopping 91% in the last three years. That'd be enough to cause even the strongest minds some disquiet. The more recent news is of little comfort, with the share price down 87% in a year. And the share price decline continued over the last week, dropping some 7.0%.
We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.
Check out our latest analysis for hmvod
Because hmvod made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last three years, hmvod saw its revenue grow by 9.9% per year, compound. That's a fairly respectable growth rate. So it's hard to believe the share price decline of 55% per year is due to the revenue. It could be that the losses were much larger than expected. This is exactly why investors need to diversify - even when a loss making company grows revenue, it can fail to deliver for shareholders.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. It might be well worthwhile taking a look at our free report on hmvod's earnings, revenue and cash flow.
A Different Perspective
The last twelve months weren't great for hmvod shares, which performed worse than the market, costing holders 87%. Meanwhile, the broader market slid about 15%, likely weighing on the stock. The three-year loss of 55% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. It's always interesting to track share price performance over the longer term. But to understand hmvod better, we need to consider many other factors. Take risks, for example - hmvod has 4 warning signs (and 2 which are concerning) we think you should know about.