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Investing in stocks comes with the risk that the share price will fall. And unfortunately for 23andMe Holding Co. (NASDAQ:ME) shareholders, the stock is a lot lower today than it was a year ago. The share price is down a hefty 69% in that time. 23andMe Holding hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time. Furthermore, it's down 37% in about a quarter. That's not much fun for holders.
If the past week is anything to go by, investor sentiment for 23andMe Holding isn't positive, so let's see if there's a mismatch between fundamentals and the share price.
Given that 23andMe Holding 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
23andMe Holding grew its revenue by 0.3% over the last year. That's not a very high growth rate considering it doesn't make profits. It's likely this muted growth has contributed to the share price decline of 69% in the last year. We'd want to see evidence that future revenue growth will be stronger before getting too interested. Of course, the market can be too impatient at times. Why not take a closer look at this one so you're ready to pounce if growth does accelerate.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
23andMe Holding shareholders are down 69% for the year, even worse than the market loss of 6.9%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. The share price decline has continued throughout the most recent three months, down 37%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. 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. Case in point: We've spotted 3 warning signs for 23andMe Holding you should be aware of, and 1 of them is a bit concerning.
Of course 23andMe Holding may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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.