Yahoo Finance Volatility 101: Should Marley Spoon (ASX:MMM) Shares Have Dropped 33%?
Investors can approximate the average market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. Investors in Marley Spoon AG (ASX:MMM) have tasted that bitter downside in the last year, as the share price dropped 33%. That's well bellow the market return of 21%. Marley Spoon hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time. The share price has dropped 35% in three months.
View our latest analysis for Marley Spoon
Because Marley Spoon is loss-making, 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last year Marley Spoon saw its revenue grow by 59%. That's well above most other pre-profit companies. The share price drop of 33% over twelve months would be considered disappointing by many, so you might argue the company is getting little credit for its impressive revenue growth. On the bright side, if this company is moving profits in the right direction, top-line growth like that could be an opportunity. Our brains have evolved to think in linear fashion, so there's value in learning to recognize exponential growth. We are, in some ways, simply the wisest of the monkeys.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
This free interactive report on Marley Spoon's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
While Marley Spoon shareholders are down 33% for the year, the market itself is up 21%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Notably, the loss over the last year isn't as bad as the 35% drop in the last three months. This probably signals that the business has recently disappointed shareholders - it will take time to win them back. If you would like to research Marley Spoon in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
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 AU exchanges.
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.
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. Thank you for reading.
