The nature of investing is that you win some, and you lose some. Unfortunately, shareholders of AvePoint, Inc. (NASDAQ:AVPT) have suffered share price declines over the last year. To wit the share price is down 54% in that time. We wouldn’t rush to judgement on AvePoint because we don’t have a long term history to look at. Shareholders have had an even rougher run lately, with the share price down 20% in the last 90 days. However, one could argue that the price has been influenced by the general market, which is down 9.8% in the same timeframe.
Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they’ve been consistent with returns.
AvePoint isn’t currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
AvePoint grew its revenue by 27% over the last year. That’s definitely a respectable growth rate. Unfortunately it seems investors wanted more, because the share price is down 54% in that time. It is of course possible that the business will still deliver strong growth, it will just take longer than expected to do it. For us it’s important to consider when you think a company will become profitable, if you’re basing your valuation on revenue.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. This free report showing analyst forecasts should help you form a view on AvePoint
A Different Perspective
We doubt AvePoint shareholders are happy with the loss of 54% over twelve months. That falls short of the market, which lost 8.4%. That’s disappointing, but it’s worth keeping in mind that the market-wide selling wouldn’t have helped. With the stock down 20% over the last three months, the market doesn’t seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we’d remain pretty wary until we see some strong business performance. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We’ve identified 2 warning signs with AvePoint , and understanding them should be part of your investment process.
There are plenty of other companies that have insiders buying up shares. You probably do 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.