Even the best investor on earth makes unsuccessful investments. But it should be a priority to avoid stomach churning catastrophes, wherever possible. We wouldn't blame China Digital Video Holdings Limited (HKG:8280) shareholders if they were still in shock after the stock dropped like a lead balloon, down 77% in just one year. While some investors are willing to stomach this sort of loss, they are usually professionals who spread their bets thinly. We wouldn't rush to judgement on China Digital Video Holdings because we don't have a long term history to look at. Furthermore, it's down 21% 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.

Check out our latest analysis for China Digital Video Holdings

Because China Digital Video Holdings is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

China Digital Video Holdings's revenue didn't grow at all in the last year. In fact, it fell 14%. That's not what investors generally want to see. The market obviously agrees, since the share price tanked 77%. Holders should not lose the lesson: loss making companies should grow revenue. 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 how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).

If you are thinking of buying or selling China Digital Video Holdings stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We doubt China Digital Video Holdings shareholders are happy with the loss of 77% over twelve months. That falls short of the market, which lost 3.6%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. With the stock down 21% 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. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.