It’s not a secret that every investor will make bad investments, from time to time. But serious investors should think long and hard about avoiding extreme losses. We wouldn’t blame P2P Transport Limited (ASX:P2P) shareholders if they were still in shock after the stock dropped like a lead balloon, down 89% in just one year. That’d be enough to make even the strongest stomachs churn. Because P2P Transport hasn’t been listed for many years, the market is still learning about how the business performs. Unfortunately the share price momentum is still quite negative, with prices down 40% in thirty days. However, we note the price may have been impacted by the broader market, which is down 21% in the same time period.
We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don’t have to lose the lesson.
See our latest analysis for P2P Transport
Given that P2P Transport 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last twelve months, P2P Transport increased its revenue by 23%. That’s definitely a respectable growth rate. However, it seems like the market wanted more, since the share price is down 89%. It could be that the losses are too much for investors to handle without losing their nerve. We’d posit that the future looks challenging, given the disconnect between revenue growth and the share price.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
ASX:P2P Income Statement April 1st 2020
Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
P2P Transport shareholders are down 89% for the year, even worse than the market loss of 16%. There’s no doubt that’s a disappointment, but the stock may well have fared better in a stronger market. The share price decline has continued throughout the most recent three months, down 28%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we’d remain pretty wary until we see some strong business performance. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should learn about the 4 warning signs we’ve spotted with P2P Transport (including 2 which is are concerning) .
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.
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.
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