Some stocks are best avoided. We don’t wish catastrophic capital loss on anyone. Imagine if you held Marathon Patent Group, Inc. (NASDAQ:MARA) for half a decade as the share price tanked 99%. And it’s not just long term holders hurting, because the stock is down 85% in the last year. Shareholders have had an even rougher run lately, with the share price down 59% in the last 90 days.
While a drop like that is definitely a body blow, money isn’t as important as health and happiness.
Given that Marathon Patent Group 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. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last five years Marathon Patent Group saw its revenue shrink by 47% per year. That puts it in an unattractive cohort, to put it mildly. So it’s not that strange that the share price dropped 65% per year in that period. This kind of price performance makes us very wary, especially when combined with falling revenue. Ironically, that behavior could create an opportunity for the contrarian investor – but only if there are good reasons to predict a brighter future.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We’re pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It’s always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Dive deeper into the earnings by checking this interactive graph of Marathon Patent Group’s earnings, revenue and cash flow.
A Different Perspective
While the broader market lost about 0.5% in the twelve months, Marathon Patent Group shareholders did even worse, losing 85%. Having said that, it’s inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 65% over the last half decade. We realise that Baron Rothschild has said investors should “buy when there is blood on the streets”, but we caution that investors should first be sure they are buying a high quality business. It’s always interesting to track share price performance over the longer term. But to understand Marathon Patent Group better, we need to consider many other factors. Take risks, for example – Marathon Patent Group has 7 warning signs (and 3 which are potentially serious) we think you should know about.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
If you spot an error that warrants correction, please contact the editor at [email protected]. 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.