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Did You Manage To Avoid Internap's (NASDAQ:INAP) Devastating 92% Share Price Drop?

Long term investing works well, but it doesn't always work for each individual stock. We don't wish catastrophic capital loss on anyone. Spare a thought for those who held Internap Corporation (NASDAQ:INAP) for five whole years - as the share price tanked 92%. And we doubt long term believers are the only worried holders, since the stock price has declined 82% over the last twelve months. Shareholders have had an even rougher run lately, with the share price down 29% in the last 90 days.

While a drop like that is definitely a body blow, money isn't as important as health and happiness.

View our latest analysis for Internap

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Given that Internap 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last five years Internap saw its revenue shrink by 1.9% per year. That's not what investors generally want to see. If a business loses money, you want it to grow, so no surprises that the share price has dropped 39% each year in that time. We're generally averse to companies with declining revenues, but we're not alone in that. Fear of becoming a 'bagholder' may be keeping people away from this 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).

NasdaqGS:INAP Income Statement, October 3rd 2019
NasdaqGS:INAP Income Statement, October 3rd 2019

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. If you are thinking of buying or selling Internap stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

While the broader market lost about 0.06% in the twelve months, Internap shareholders did even worse, losing 82%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 39% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of Internap by clicking this link.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.