Taking the occasional loss comes part and parcel with investing on the stock market. And there’s no doubt that Airtasker Limited (ASX:ART) stock has had a really bad year. The share price is down a hefty 63% in that time. Airtasker hasn’t been listed for long, so although we’re wary of recent listings that perform poorly, it may still prove itself with time. Shareholders have had an even rougher run lately, with the share price down 33% in the last 90 days.
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.
See our latest analysis for Airtasker
Because Airtasker 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. 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 twelve months, Airtasker increased its revenue by 41%. We think that is pretty nice growth. Meanwhile, the share price tanked 63%, suggesting the market had much higher expectations. It may well be that the business remains approximately on track, but its revenue growth has simply been delayed. 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 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. You can see what analysts are predicting for Airtasker in this interactive graph of future profit estimates.
We doubt Airtasker shareholders are happy with the loss of 63% over twelve months. That falls short of the market, which lost 3.6%. 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 33%, 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. It’s always interesting to track share price performance over the longer term. But to understand Airtasker better, we need to consider many other factors. For instance, we’ve identified 4 warning signs for Airtasker that you should be aware of.