The BetMakers Holdings Limited (ASX:TBH) shareholders should be happy to see the share price up 11% in the last week. But only the myopic could ignore the astounding decline over three years. Indeed, the share price is down a whopping 84% in the last three years. Arguably, the recent bounce is to be expected after such a bad drop. Only time will tell if the company can sustain the turnaround.
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.
View our latest analysis for BetMakers Holdings
BetMakers Holdings isn't a profitable company, so it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. 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 three years, BetMakers Holdings saw its revenue grow by 74% per year, compound. That is faster than most pre-profit companies. So why has the share priced crashed 46% per year, in the same time? The share price makes us wonder if there is an issue with profitability. Ultimately, revenue growth doesn't amount to much if the business can't scale well. If the company is low on cash, it may have to raise capital soon.
The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.
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 to the business. You can see what analysts are predicting for BetMakers Holdings in this interactive graph of future profit estimates.
A Different Perspective
Over the last year, BetMakers Holdings shareholders took a loss of 75%. In contrast the market gained about 12%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Shareholders have lost 46% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares - and the price they paid.