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Investors can approximate the average market return by buying an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. That downside risk was realized by C4X Discovery Holdings plc (LON:C4XD) shareholders over the last year, as the share price declined 50%. That's well bellow the market return of 2.3%. To make matters worse, the returns over three years have also been really disappointing (the share price is 42% lower than three years ago). Furthermore, it's down 20% in about a quarter. That's not much fun for holders.
See our latest analysis for C4X Discovery Holdings
Given that C4X Discovery Holdings 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
C4X Discovery Holdings grew its revenue by 4840% over the last year. That's well above most other pre-profit companies. The share price drop of 50% over twelve months would be considered disappointing by many, so you might argue the company is getting little credit for its impressive revenue growth. Prima facie, revenue growth like that should be a good thing, so it's worth checking whether losses have stabilized. Our monkey brains haven't evolved to think exponentially, so humans do tend to underestimate companies that have exponential growth.
Depicted in the graphic below, you'll see revenue and earnings over time. If you want more detail, you can click on the chart itself.
Take a more thorough look at C4X Discovery Holdings's financial health with this free report on its balance sheet.
A Different Perspective
C4X Discovery Holdings shareholders are down 50% for the year, but the broader market is up 2.3%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. The three-year loss of 17% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Warren Buffett famously said he likes to 'buy when there is blood on the streets', he also focusses on high quality stocks with solid prospects. If you would like to research C4X Discovery Holdings in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.