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. We wouldn't blame LAIX Inc. (NYSE:LAIX) shareholders if they were still in shock after the stock dropped like a lead balloon, down 71% in just one year. That'd be a striking reminder about the importance of diversification. LAIX hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time. Shareholders have had an even rougher run lately, with the share price down 42% in the last 90 days. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.
Check out our latest analysis for LAIX
LAIX isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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.
LAIX grew its revenue by 61% over the last year. That's well above most other pre-profit companies. So the hefty 71% share price crash makes us think the company has somehow offended market participants. There's clearly something unusual going on here such as an acquisition that hasn't delivered expected profits. We'd recommend taking a very close look at the stock (and any available forecasts), before considering a purchase, because the share price is not correlated with the revenue growth, that's for sure. Of course, investors do over-react when they are stressed out, so the sell-off could be unjustifiably severe.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
This free interactive report on LAIX's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
We doubt LAIX shareholders are happy with the loss of 71% over twelve months. That falls short of the market, which lost 0.8%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. With the stock down 42% 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. It's always interesting to track share price performance over the longer term. But to understand LAIX better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with LAIX (at least 1 which is a bit concerning) , and understanding them should be part of your investment process.
But note: LAIX may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
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 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.
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. Thank you for reading.
"easy" - Google News
April 20, 2020 at 08:00PM
https://ift.tt/2XPsiCV
Easy Come, Easy Go: How LAIX (NYSE:LAIX) Shareholders Got Unlucky And Saw 71% Of Their Cash Evaporate - Yahoo Finance
"easy" - Google News
https://ift.tt/38z63U6
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update
Bagikan Berita Ini
0 Response to "Easy Come, Easy Go: How LAIX (NYSE:LAIX) Shareholders Got Unlucky And Saw 71% Of Their Cash Evaporate - Yahoo Finance"
Post a Comment