Market cap

WeWork Inc (NYSE:WE) adds $183 million to market cap in last 7 days, though investors from a year ago are still down 50%

Investing in stocks involves the risk that the price of the stock will fall. And unfortunately for WeWork Inc. (NYSE:WE) shareholders, the stock is much lower today than it was a year ago. During this relatively short period, the stock price fell by 50%. We wouldn’t rush to pass judgment on WeWork because we don’t have a long-term track record to review. The falls have accelerated recently, with the stock price falling 23% in the past three months.

The recent 5.2% rise could be a positive sign of things to come, so let’s look a lot at historical fundamentals.

Given that WeWork has posted losses over the past twelve months, we think the market is likely more focused on revenue and revenue growth, at least for now. Shareholders of unprofitable companies generally expect strong revenue growth. As you can imagine, rapid revenue growth, when sustained, often results in rapid profit growth.

WeWork’s revenue didn’t grow at all last year. In fact, it fell 7.4%. This is generally not what investors want to see. The 50% drop in share price is understandable given that the company has no earnings to brag about. Fingers crossed, it’s stock low. We have a natural aversion to companies that lose money and decrease revenue. But that may be too cautious.

You can see how earnings and income have changed over time below (find out the exact values ​​by clicking on the image).

NYSE:WE Earnings and Revenue Growth July 22, 2022

We consider it positive that insiders have made significant purchases over the past year. Even so, future earnings will be far more important to whether current shareholders are making money. If you are considering buying or selling WeWork stock, you should check out this free report showing analyst earnings forecast.

A different perspective

We doubt WeWork shareholders will be happy with the 50% year-over-year loss. This is below the market, which lost 13%. It’s disappointing, but it’s worth bearing in mind that selling market-wide wouldn’t have helped. With the stock down 23% in the past 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. I find it very interesting to look at stock price over the long term as a proxy for company performance. But to really get insight, we also need to consider other information. Take for example the ubiquitous specter of investment risk. We have identified 5 warning signs with WeWork (at least 1, which makes us a little uneasy), and understanding them should be part of your investment process.

WeWork isn’t the only stock insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider buying, might be just the ticket.

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.

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