Introducing Buddy Technologies (ASX:BUD), The Stock That Tanked 74%
Buddy Technologies Limited (ASX:BUD) shareholders should be happy to see the share price up 13% in the last quarter. But that is meagre solace when you consider how the price has plummeted over the last year. Indeed, the share price is down a whopping 74% in the last year. It's not uncommon to see a bounce after a drop like that. Only time will tell if the company can sustain the turnaround.
View our latest analysis for Buddy Technologies
Because Buddy Technologies is loss-making, 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. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last twelve months, Buddy Technologies increased its revenue by 327%. That's a strong result which is better than most other loss making companies. So the hefty 74% share price crash makes us think the company has somehow offended market participants. There's clearly something unusual going on here such as an acquisition that hasn't delivered expected profits. What is clear is that the market is not judging the company on its revenue growth right now. Of course, markets do over-react so share price drop may be too harsh.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
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. It might be well worthwhile taking a look at our free report on Buddy Technologies's earnings, revenue and cash flow.
A Different Perspective
Over the last year, Buddy Technologies shareholders took a loss of 74%. In contrast the market gained about 25%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Shareholders have lost 30% 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. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of Buddy Technologies by clicking this link.
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 AU 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.
