Year-on-year investor losses hit 43% as stock shed $161m last week

Passive investing in an index fund is a good way to ensure that your own returns roughly match the broader market. When you buy individual stocks, you can earn higher profits, but you also run the risk of underperformance. This downside risk was materialized by Infinera Corporation (NASDAQ:INFN) shareholders over the past year, with the stock price down 43%. This is disappointing when you consider that the market is down 18%. At least the damage isn’t that bad if you look at the past three years, since the stock is down 4.4% over that time. And the share price decline has continued over the past week, dropping around 13%.

With the stock down 13% in the past week, it’s worth taking a look at the trade performance and seeing if there are any red flags.

However, if you prefer to see where opportunities and risks are within the INFN industryyou can consult our analysis on the communications industry in the United States.

Since Infinera 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. Shareholders of unprofitable companies generally expect strong 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.

Infinera increased its turnover by 6.6% compared to last year. While that might sound decent, it’s not great considering the company continues to make losses. Given this lackluster revenue growth, the 43% share price decline seems appropriate enough. It is important to remember that non-profit businesses need to grow. But if you buy a loss-making company, you could become a loss-making investor.

The image below shows how earnings and income have tracked over time (if you click on the image you can see more details).

NasdaqGS: INFN Earnings and Revenue Growth September 5, 2022

We consider it positive that insiders have made significant purchases over the past year. That said, most people consider profit and revenue growth trends to be a more meaningful guide to the business. This free report showing analyst forecasts should help you form an opinion on Infinera

A different perspective

While the broader market lost around 18% in the twelve months, Infinera shareholders fared even worse, losing 43%. However, it could simply be that the stock price was impacted by greater market jitters. It might be worth keeping an eye on the fundamentals, in case there is a good opportunity. Unfortunately, last year’s performance capped a bad run, with shareholders facing a total loss of 7% per year over five years. Generally speaking, long-term stock price weakness can be a bad sign, although contrarian investors may want to seek out the stock in hopes of a turnaround. It is always interesting to follow the evolution of the share price over the long term. But to better understand Infinera, we need to consider many other factors. Take risks, for example – Infinera has 2 warning signs we think you should know.

There are many other companies whose insiders buy shares. You probably do not want to miss this free list of growing companies insiders are buying.

Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on US exchanges.

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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