It's not a secret that every investor will make bad investments, from time to time. But it's not unreasonable to try to avoid truly shocking capital losses. It must have been painful to be a MOGU Inc. (NYSE:MOGU) shareholder over the last year, since the stock price plummeted 88% in that time. While some investors are willing to stomach this sort of loss, they are usually professionals who spread their bets thinly. MOGU may have better days ahead, of course; we've only looked at a one year period. Even worse, it's down 22% in about a month, which isn't fun at all.
While a drop like that is definitely a body blow, money isn't as important as health and happiness.
Given that MOGU 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. 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.
In the last year MOGU saw its revenue grow by 5.0%. While that may seem decent it isn't great considering the company is still making a loss. Nonetheless, it's fair to say the 88% share price implosion is unexpected.. We'd venture this growth was too low to give holders confidence that profitability is on the horizon. If and only if this company is still likely to succeed, just a little slower, this could be a good opportunity.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
This free interactive report on MOGU's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Given that the market gained 23% in the last year, MOGU shareholders might be miffed that they lost 88%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock down 7.7% over the last three months, the market doesn't seem to believe that the company has solved all its problems. 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 MOGU (at least 1 which is significant) , and understanding them should be part of your investment process.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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