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It's not a secret that every investor will make bad investments, from time to time. But it's not unreasonable to try to avoid truly shocking capital losses. It must have been painful to be a Virgin Galactic Holdings, Inc. (NYSE:SPCE) shareholder over the last year, since the stock price plummeted 88% in that time. A loss like this is a stark reminder that portfolio diversification is important. Because Virgin Galactic Holdings hasn't been listed for many years, the market is still learning about how the business performs. The falls have accelerated recently, with the share price down 30% 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. While a drop like that is definitely a body blow, money isn't as important as health and happiness.
While the last year has been tough for Virgin Galactic Holdings shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.
Because Virgin Galactic Holdings made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. 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.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Virgin Galactic Holdings is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. If you are thinking of buying or selling Virgin Galactic Holdings stock, you should check out this free report showing analyst consensus estimates for future profits.
A Different Perspective
Virgin Galactic Holdings shareholders are down 88% for the year, even worse than the market loss of 17%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. The share price decline has continued throughout the most recent three months, down 30%, suggesting an absence of enthusiasm from investors. 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. For example, we've discovered 4 warning signs for Virgin Galactic Holdings that you should be aware of before investing here.
If you are like me, then you will 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.