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Shareholders in Greenbrook TMS (TSE:GTMS) have lost 75%, as stock drops 12% this past week

The art and science of stock market investing requires a tolerance for losing money on some of the shares you buy. But it should be a priority to avoid stomach churning catastrophes, wherever possible. So we hope that those who held Greenbrook TMS Inc. (TSE:GTMS) during the last year don't lose the lesson, in addition to the 75% hit to the value of their shares. That'd be a striking reminder about the importance of diversification. We note that it has not been easy for shareholders over three years, either; the share price is down 65% in that time. Shareholders have had an even rougher run lately, with the share price down 47% in the last 90 days.

After losing 12% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

View our latest analysis for Greenbrook TMS

Given that Greenbrook TMS 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. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

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In the last year Greenbrook TMS saw its revenue grow by 5.1%. While that may seem decent it isn't great considering the company is still making a loss. Nonetheless, it's fair to say the 75% 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).

earnings-and-revenue-growth
earnings-and-revenue-growth

If you are thinking of buying or selling Greenbrook TMS stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Greenbrook TMS shareholders are down 75% for the year, but the broader market is up 21%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. The three-year loss of 18% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. 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 Greenbrook TMS (1 is a bit unpleasant) that you should be aware of.

We will like Greenbrook TMS better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.