Imagine Owning Worldgate Global Logistics (HKG:8292) And Trying To Stomach The 84% Share Price Drop – Simply Wall St News

Imagine Owning Worldgate Global Logistics (HKG:8292) And Trying To Stomach The 84% Share Price Drop – Simply Wall St News


As every investor would know, not every swing hits the sweet spot. But you want to avoid the really big losses like the plague. So take a moment to sympathize with the long term shareholders of Worldgate Global Logistics Ltd (HKG:8292), who have seen the share price tank a massive 84% over a three year period. That might cause some serious doubts about the merits of the initial decision to buy the stock, to put it mildly. And over the last year the share price fell 70%, so we doubt many shareholders are delighted. More recently, the share price has dropped a further 24% in a month.

While a drop like that is definitely a body blow, money isn’t as important as health and happiness.

View our latest analysis for Worldgate Global Logistics

Given that Worldgate Global Logistics 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over the last three years, Worldgate Global Logistics’s revenue dropped 15% per year. That means its revenue trend is very weak compared to other loss making companies. And as you might expect the share price has been weak too, dropping at a rate of 46% per year. Never forget that loss making companies with falling revenue can and do cause losses for everyday investors. There is a good reason that investors often describe buying a sharply falling stock price as ‘trying to catch a falling knife’. Think about it.

The company’s revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

SEHK:8292 Income Statement, February 18th 2020
SEHK:8292 Income Statement, February 18th 2020

This free interactive report on Worldgate Global Logistics’s balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Worldgate Global Logistics shareholders are down 70% for the year, falling short of the market return. The market shed around 0.2%, no doubt weighing on the stock price. Shareholders have lost 46% 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. Although Warren Buffett famously said he likes to ‘buy when there is blood on the streets’, he also focusses on high quality stocks with solid prospects. 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. Take risks, for example – Worldgate Global Logistics has 4 warning signs (and 2 which shouldn’t be ignored) we think you should know about.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK 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.

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