Long term investing is the way to go, but that doesn't mean you should hold every stock forever. It hits us in the gut when we see fellow investors suffer a loss. Anyone who held Shenzhen Minkave Technology Co., Ltd. (SZSE:300506) for five years would be nursing their metaphorical wounds since the share price dropped 70% in that time. And it's not just long term holders hurting, because the stock is down 53% in the last year. Unfortunately the share price momentum is still quite negative, with prices down 36% in thirty days.
If the past week is anything to go by, investor sentiment for Shenzhen Minkave Technology isn't positive, so let's see if there's a mismatch between fundamentals and the share price.
Given that Shenzhen Minkave Technology 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 desire strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last five years Shenzhen Minkave Technology saw its revenue shrink by 43% per year. That puts it in an unattractive cohort, to put it mildly. So it's not that strange that the share price dropped 11% per year in that period. We don't think this is a particularly promising picture. Ironically, that behavior could create an opportunity for the contrarian investor - but only if there are good reasons to predict a brighter future.
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 Shenzhen Minkave Technology's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
We regret to report that Shenzhen Minkave Technology shareholders are down 53% for the year. Unfortunately, that's worse than the broader market decline of 17%. 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 11% 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. 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. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for Shenzhen Minkave Technology (of which 2 don't sit too well with us!) you should know about.
Of course Shenzhen Minkave Technology may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese 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.