In This Article:
The art and science of stock market investing requires a tolerance for losing money on some of the shares you buy. But it's not unreasonable to try to avoid truly shocking capital losses. It must have been painful to be a Porch Group, Inc. (NASDAQ:PRCH) shareholder over the last year, since the stock price plummeted 87% in that time. 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 Porch Group because we don't have a long term history to look at. Shareholders have had an even rougher run lately, with the share price down 57% in the last 90 days. While a drop like that is definitely a body blow, money isn't as important as health and happiness.
With the stock having lost 17% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.
Check out our latest analysis for Porch Group
Given that Porch Group didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last year Porch Group saw its revenue grow by 172%. That's well above most other pre-profit companies. So the hefty 87% share price crash makes us think the company has somehow offended market participants. Something weird is definitely impacting the stock price; we'd venture the company has destroyed value somehow. We'd recommend taking a very close look at the stock (and any available forecasts), before considering a purchase, because the share price is not correlated with the revenue growth, that's for sure. Of course, investors do over-react when they are stressed out, so the sell-off could be unjustifiably severe.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. So it makes a lot of sense to check out what analysts think Porch Group will earn in the future (free profit forecasts).
A Different Perspective
Porch Group shareholders are down 87% for the year, even worse than the market loss of 16%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. The share price decline has continued throughout the most recent three months, down 57%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Porch Group , and understanding them should be part of your investment process.