Long-term investing is not possible without some degree of poor investment. However, truly bad investments should be rare. So let's think for a moment about the following misfortune. Brightcove Inc. Investors held on to (NASDAQ:BCOV) stock for three years as its stock price fell a whopping 89%. That must be an unsettling experience. Recent news that the stock price has fallen 61% in one year is not very reassuring. Furthermore, about a quarter of them have fallen by 32%. That's not much fun for the holder. In this scenario, we have shareholders at heart. This is a good reminder of the importance of diversification, and it's worth bearing in mind that there's more to life than money anyway.
Next, let's look at the company's fundamentals to see if long-term shareholder returns are in line with the performance of the underlying business.
Check out our latest analysis for Brightcove.
Given that Brightcove didn't make a profit in the last twelve months, we'll focus on revenue growth to get a quick look at its business development. When a company isn't making profits, we usually expect good revenue growth. That's because rapid growth in revenue can often be easily extrapolated to predict profits of considerable size.
Over the past three years, Brightcove's revenue has declined by 0.4% per year. That's not what investors generally want. That said, the 24% annual share price decline highlights the risks of investing in unprofitable companies. We typically dislike companies with declining revenues, but we're not alone. The likelihood of stock prices returning to their previous highs in the short term is just a snowball effect.
The image below shows how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide for a business. So it makes a lot of sense to see how much profit analysts think Brightcove will earn in the future (free profit forecast).
different perspective
While the broader market is up about 24% in the last year, Brightcove shareholders are down 61%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the 13% annualized loss over the past five years. Generally speaking, long-term stock price weakness can be a bad sign, but contrarian investors may want to research the stock in hopes of a turnaround. I think it's very interesting to look at stock price over the long term as an indicator of business performance. But to really gain insight, you need to consider other information as well. For example, consider the ever-present fear of investment risk. We've identified 2 warning signs for you We use Brightcove and understanding them should be part of your investment process.
Brightcove isn't the only stock that insiders are buying.For people who like searching succeed in investing this free This list of growing companies with recent insider purchasing may be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
