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Did Changing Sentiment Drive HNA Technology Investments Holdings's (HKG:2086) Share Price Down A Painful 83%?

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As every investor would know, you don’t hit a homerun every time you swing. But it would be foolish to simply accept every extremely large loss as an inevitable part of the game. We wouldn’t blame HNA Technology Investments Holdings Limited (HKG:2086) shareholders if they were still in shock after the stock dropped like a lead balloon, down 83% in just one year. A loss like this is a stark reminder that portfolio diversification is important. Notably, shareholders had a tough run over the longer term, too, with a drop of 82% in the last three years. The falls have accelerated recently, with the share price down 17% in the last three months. Of course, this share price action may well have been influenced by the 15% decline in the broader market, throughout the period.

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.

See our latest analysis for HNA Technology Investments Holdings

Given that HNA Technology Investments 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. Shareholders of unprofitable companies usually expect strong revenue growth. That’s because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last year HNA Technology Investments Holdings saw its revenue grow by 20%. We think that is pretty nice growth. Unfortunately, the market wanted something better, given it sent the share price 83% lower during the year. It could be that the losses are too much for investors to handle without losing their nerve. We’d posit that the future looks challenging, given the disconnect between revenue growth and the share price.

The company’s revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

SEHK:2086 Income Statement March 26th 2020

Take a more thorough look at HNA Technology Investments Holdings’s financial health with this free report on its balance sheet.

A Different Perspective

While the broader market lost about 17% in the twelve months, HNA Technology Investments Holdings shareholders did even worse, losing 83%. Having said that, it’s inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year’s performance caps off a bad run, with the shareholders facing a total loss of 19% per year over five years. We realise that Baron Rothschild has said investors should “buy when there is blood on the streets”, but we caution that investors should first be sure they are buying a high quality business. 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. To that end, you should learn about the 3 warning signs we’ve spotted with HNA Technology Investments Holdings (including 1 which is is concerning) .

If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.