The simplest way to benefit from a rising market is to buy an index fund. But if you buy individual stocks, you can do both better or worse than that. Unfortunately the iDreamSky Technology Holdings Limited (HKG:1119) share price slid 33% over twelve months. That contrasts poorly with the market decline of 20%. At least the damage isn't so bad if you look at the last three years, since the stock is down 0.6% in that time. Unfortunately the share price momentum is still quite negative, with prices down 14% in thirty days.

With the stock having lost 12% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

View our latest analysis for iDreamSky Technology Holdings

Because iDreamSky Technology Holdings made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

iDreamSky Technology Holdings' revenue didn't grow at all in the last year. In fact, it fell 18%. That looks pretty grim, at a glance. The stock price has languished lately, falling 33% in a year. What would you expect when revenue is falling, and it doesn't make a profit? We think most holders must believe revenue growth will improve, or else costs will decline.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. So it makes a lot of sense to check out what analysts think iDreamSky Technology Holdings will earn in the future (free profit forecasts).

A Different Perspective

iDreamSky Technology Holdings shareholders are down 33% for the year, falling short of the market return. The market shed around 20%, no doubt weighing on the stock price. The three-year loss of 0.2% 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. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. 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. Case in point: We've spotted 3 warning signs for iDreamSky Technology Holdings you should be aware of, and 1 of them doesn't sit too well with us.

iDreamSky Technology Holdings is not the only stock that insiders are buying. 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 HK exchanges.

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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.