It's easy to feel disappointed if you buy a stock that goes down. But sometimes a share price fall can have more to do with market conditions than the performance of the specific business. Over the year the Boku, Inc. (LON:BOKU) share price fell 41%. However, that's better than the market's overall decline of 44%. However, the longer term returns haven't been so bad, with the stock down 12% in the last three years. The falls have accelerated recently, with the share price down 29% in the last three months. Of course, this share price action may well have been influenced by the 31% decline in the broader market, throughout the period.

With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.

See our latest analysis for Boku

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Boku managed to increase earnings per share from a loss to a profit, over the last 12 months.

When a company has just transitioned to profitability, earnings per share growth is not always the best way to look at the share price action. So it makes sense to check out some other factors.

Boku managed to grow revenue over the last year, which is usually a real positive. Since we can't easily explain the share price movement based on these metrics, it might be worth considering how market sentiment has changed towards the stock.

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 know that Boku has improved its bottom line lately, but what does the future have in store? If you are thinking of buying or selling Boku stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

With a loss of 41% in the last year, Boku's returns haven't been too far from the market return of -44%. Over three years shareholders have low 4% per year. This suggests the company might have some problems, not least because the last year saw an even steeper fall. Some people who buy stocks with declining share prices get called 'bagholders', which is slang for a person who owns worthless shares. Investors need thick skin. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Boku , and understanding them should be part of your investment process.