As every investor would know, you don't hit a homerun every time you swing. But serious investors should think long and hard about avoiding extreme losses. So spare a thought for the long term shareholders of Presto Automation, Inc. (NASDAQ:PRST); the share price is down a whopping 78% in the last twelve months. That'd be a striking reminder about the importance of diversification. Because Presto Automation hasn't been listed for many years, the market is still learning about how the business performs. It's down 79% in about a month.
If the past week is anything to go by, investor sentiment for Presto Automation isn't positive, so let's see if there's a mismatch between fundamentals and the share price.
See our latest analysis for Presto Automation
Presto Automation isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Presto Automation grew its revenue by 9.1% over the last year. That's not a very high growth rate considering it doesn't make profits. Nonetheless, it's fair to say the 78% share price implosion is unexpected.. Clearly the market was expecting better, and this may blow out projections of profitability. If and only if this company is still likely to succeed, just a little slower, this could be a good opportunity.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Take a more thorough look at Presto Automation's financial health with this free report on its balance sheet.
A Different Perspective
Presto Automation shareholders are down 78% for the year, even worse than the market loss of 20%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. It's worth noting that the last three months did the real damage, with a 79% decline. This probably signals that the business has recently disappointed shareholders - it will take time to win them back. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Presto Automation , and understanding them should be part of your investment process.
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 US exchanges.
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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.
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