- Oops!Something went wrong.Please try again later.
Investors can approximate the average market return by buying an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Investors in 23andMe Holding Co. (NASDAQ:ME) have tasted that bitter downside in the last year, as the share price dropped 11%. That contrasts poorly with the market return of 26%. 23andMe Holding may have better days ahead, of course; we've only looked at a one year period. On top of that, the share price is down 20% in the last week.
If the past week is anything to go by, investor sentiment for 23andMe Holding isn't positive, so let's see if there's a mismatch between fundamentals and the share price.
Because 23andMe Holding 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In just one year 23andMe Holding saw its revenue fall by 5.9%. That's not what investors generally want to see. The stock price has languished lately, falling 11% 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 graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
This free interactive report on 23andMe Holding's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
While 23andMe Holding shareholders are down 11% for the year, the market itself is up 26%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. It's great to see a nice little 1.0% rebound in the last three months. This could just be a bounce because the selling was too aggressive, but fingers crossed it's the start of a new trend. It's always interesting to track share price performance over the longer term. But to understand 23andMe Holding 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 23andMe Holding (at least 1 which shouldn't be ignored) , and understanding them should be part of your investment process.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.