LMP Automotive Holdings (NASDAQ: LMPX) Losing an Additional US $ 20 Million, Bringing Total Shareholder Losses to 33% Over 1 Year
It is easy to match the overall market return by purchasing an index fund. While individual stocks can be big winners, many others fail to generate satisfactory returns. Investors in LMP Automotive Holdings, Inc. (NASDAQ: LMPX) have tasted this bitter drop over the past year, with the stock price falling 33%. This is significantly lower than the market return of around 37%. Since LMP Automotive Holdings has not been listed on the stock exchange for many years, the market is still learning more about the performance of the company. Unfortunately, the stock price momentum is still quite negative, with prices down 17% in thirty days.
Since the past week has been tough for shareholders, let’s take a look at the fundamentals and see what we can learn.
See our latest analysis for LMP Automotive Holdings
Given that LMP Automotive Holdings has recorded a loss over the past twelve months, we believe the market is likely more focused on revenue and revenue growth, at least for now. Generally speaking, companies with no profits are expected to increase their income every year, and at a good rate. As you can imagine, rapid revenue growth, when sustained, often leads to rapid profit growth.
Last year, LMP Automotive Holdings saw its turnover increase by 1002%. This is way above most other nonprofits. Considering the growth in revenue, the 33% drop in the share price seems quite severe. Our sympathies to the shareholders who are now under water. On the positive side, if this company steers its profits in the right direction, such top-line growth could be an opportunity. Our monkey brains haven’t evolved to think exponentially, so humans tend to underestimate companies that grow exponentially.
The image below shows how revenue and income have tracked over time (if you click on the image you can see more details).
It’s probably worth noting that we’ve seen some significant insider buying in the last quarter, which we see as positive. That said, we believe earnings and revenue growth trends are even more important factors to consider. So it makes sense to check what analysts think LMP Automotive Holdings will earn in the future (free profit forecast).
A different perspective
Given that the market has gained 37% in the past year, shareholders of LMP Automotive Holdings might be upset that they lost 33%. While the goal is to do better than that, it’s worth remembering that even large, long-term investments sometimes underperform for a year or more. The stock price continued to decline over the past three months, down 7.0%, suggesting a lack of investor enthusiasm. Given the relatively short history of this stock, we would remain fairly cautious until we see strong trading performance. It is always interesting to follow the evolution of stock prices over the long term. But to better understand LMP Automotive Holdings, there are many other factors that we need to consider. Like risks, for example. Every business has them, and we’ve spotted 2 warning signs for LMP Automotive Holdings (1 of which cannot be ignored!) that you should know.
LMP Automotive Holdings isn’t the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider buys, might be just the ticket.
Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently traded on US stock exchanges.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.
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