NextNav (NASDAQ:NN) shareholders lost 50% as the stock fell 14% in the past week
Passive investing in an index fund is a good way to ensure that your own returns roughly match the broader market. Active investors aim to buy stocks that significantly outperform the market – but in the process, they risk underperforming. This downside risk was materialized by Next Nav Inc. (NASDAQ:NN) shareholders over the past year as the stock price fell 50%. This contrasts poorly with the market’s 9.0% decline. NextNav hasn’t been listed for a long time, so while we’re wary of poorly performing recent listings, it can still prove itself over time. Moreover, it fell by 35% in about a quarter. It’s not much fun for the holders. We note that the company released results quite recently; and the market is hardly thrilled. You can view the latest figures in our corporate report.
After losing 14% last week, it’s worth looking at company fundamentals to see what we can infer from past performance.
See our latest analysis for NextNav
Since NextNav has not made a profit in the last twelve months, we will focus on revenue growth to get a quick overview of its business development. When a business is not making a profit, you generally expect to see good revenue growth. Indeed, it is difficult to be sure that a business will be sustainable if revenue growth is negligible and it never makes a profit.
NextNav has increased its revenue by 155% over the past year. That’s way above most other nonprofits. The stock price‘s 50% year-over-year plunge would be considered disappointing by many, so you could say the company gets little credit for its impressive revenue growth. At first glance, such revenue growth should be a good thing, so it’s worth checking to see if losses have leveled off. Our brains have evolved to think linearly, so it helps to learn to recognize exponential growth. We are, in some ways, simply the wisest of apes.
You can see how revenue and earnings have changed over time in the image below (click on the graph to see the exact values).
Take a closer look at NextNav’s financial health with this free report on its balance sheet.
A different perspective
NextNav shareholders are down 50% on the year, even worse than the market loss of 9.0%. It’s no doubt a disappointment, but the stock may well have done better in a stronger market. With the stock down 35% in the last three months, the market doesn’t seem to believe the company has solved all of its problems. Basically, most investors should be wary of buying poorly performing stocks unless the company itself has clearly improved. It is always interesting to follow the evolution of the share price over the long term. But to better understand NextNav, we need to consider many other factors. Example: we have identified 3 warning signs for NextNav you should be aware.
Sure, you might find a fantastic investment by looking elsewhere. So take a look at this free list of companies that we believe will increase their profits.
Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on US exchanges.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.