Investors in MyDeal.com.au (ASX:MYD) have unfortunately lost 46% over the last year
It's easy to match the overall market return by buying an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. That downside risk was realized by MyDeal.com.au Limited (ASX:MYD) shareholders over the last year, as the share price declined 46%. That's disappointing when you consider the market returned 16%. MyDeal.com.au may have better days ahead, of course; we've only looked at a one year period. More recently, the share price has dropped a further 11% in a month.
It's worthwhile assessing if the company's economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let's do just that.
View our latest analysis for MyDeal.com.au
Because MyDeal.com.au 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. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last year MyDeal.com.au saw its revenue grow by 150%. That's well above most other pre-profit companies. The share price drop of 46% over twelve months would be considered disappointing by many, so you might argue the company is getting little credit for its impressive revenue growth. Prima facie, revenue growth like that should be a good thing, so it's worth checking whether losses have stabilized. Our monkey brains haven't evolved to think exponentially, so humans do tend to underestimate companies that have exponential growth.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
If you are thinking of buying or selling MyDeal.com.au stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
While MyDeal.com.au shareholders are down 46% for the year, the market itself is up 16%. 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 0.7% 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 MyDeal.com.au better, we need to consider many other factors. Even so, be aware that MyDeal.com.au is showing 1 warning sign in our investment analysis , you should know about...
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU 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.