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The art and science of stock market investing requires a tolerance for losing money on some of the shares you buy. But serious investors should think long and hard about avoiding extreme losses. So we hope that those who held Diligent Media Corporation Limited (NSE:DNAMEDIA) during the last year don't lose the lesson, in addition to the 94% hit to the value of their shares. That'd be a striking reminder about the importance of diversification. Diligent Media hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time. The falls have accelerated recently, with the share price down 50% in the last three months.
While a drop like that is definitely a body blow, money isn't as important as health and happiness.
See our latest analysis for Diligent Media
Diligent Media isn't a profitable company, so it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In just one year Diligent Media saw its revenue fall by 11%. That looks pretty grim, at a glance. The share price fall of 94% in a year tells the story. That's a stern reminder that profitless companies need to grow the top line, at the very least. But markets do over-react, so there opportunity for investors who are willing to take the time to dig deeper and understand the business.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
We doubt Diligent Media shareholders are happy with the loss of 94% over twelve months. That falls short of the market, which lost 9.0%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. With the stock down 50% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. You could get a better understanding of Diligent Media's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.