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Veritone, Inc. (NASDAQ:VERI) shareholders should be happy to see the share price up 30% in the last month. But that doesn't change the fact that the returns over the last three years have been stomach churning. Indeed, the share price is down a whopping 80% in the last three years. So it sure is nice to see a bit of an improvement. Only time will tell if the company can sustain the turnaround.
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 Veritone
Veritone isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.
In the last three years, Veritone saw its revenue grow by 3.2% per year, compound. That's not a very high growth rate considering it doesn't make profits. But the share price crash at 22% per year does seem a bit harsh! We generally don't try to 'catch the falling knife'. Of course, revenue growth is nice but generally speaking the lower the profits, the riskier the business - and this business isn't making steady profits.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
If you are thinking of buying or selling Veritone stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
It's nice to see that Veritone shareholders have received a total shareholder return of 60% over the last year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 5% per year), it would seem that the stock's performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 4 warning signs for Veritone (1 shouldn't be ignored) that you should be aware of.
Of course Veritone may not be the best stock to buy. So you may wish to see this free collection of growth stocks.