Global Business Travel Group (NYSE:GBTG) shareholders lost 50%, as shares fell 12% last week | Tech US News

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Investors can approximate the average market return by purchasing an index fund. While individual stocks can be big winners, many more fail to generate satisfactory returns. Investments in Global Business Travel Group, Inc. (NYSE:GBTG) have tasted that bitter downside in the past year, as the stock price has fallen 50%. That contrasts poorly with the market’s 20% decline. We are not quick to judge Global Business Travel Group because we don’t have a long-term track record to look at. Also, it’s down 37% in about a quarter. Not much fun for the headlines. This could be related to recent financial results; you can catch up on the latest data by reading our company report.

After losing 12% last week, it’s worth digging into the company’s fundamentals to see what we can infer from past performance.

Our analysis indicates that GBTG is potentially underrated!

Global Business Travel Group is not currently profitable, so most analysts would look to revenue growth to get an idea of ​​how fast the underlying business is growing. Shareholders of unprofitable companies often expect strong earnings growth. As you can imagine, rapid revenue growth, when sustained, often leads to rapid profit growth.

In the last year, Global Business Travel Group has seen its revenue grow by 165%. This is a strong result that is better than most other loss-making companies. Given the revenue growth, a 50% share price drop seems pretty steep. Our sympathies to the shareholders who are now underwater. On the bright side, if this company is moving profits in the right direction, top line growth like that could be an opportunity. Our brains evolved to think linearly, so it’s important to learn to recognize exponential growth. We are, in some ways, simply the wisest of monkeys.

You can see how earnings and revenue have changed over time in the image below (click on the graph to see the exact values).

revenue and earnings growth
NYSE: GBTG Earnings and Revenue Growth as of Nov 13, 2022

We like that experts have been buying stocks over the past twelve months. Still, future earnings will be far more important to whether current shareholders are making money. If you are considering buying or selling shares of Global Business Travel Group, you should check this out free report showing analysts’ earnings forecasts.

A Different Perspective

We doubt that the shareholders of Global Business Travel Group will be happy with the loss of 50% over twelve months. That’s below the market, which lost 20%. There’s no doubt it’s a disappointment, but it’s possible the stock could do better in a stronger market. The decline in the share price has continued over the past three months, down 37%, suggesting an absence of enthusiasm on the part of investors. Basically, most investors should be wary of buying a poorly performing stock unless the business itself is clearly improving. I find it very interesting to look at the long-term stock price as an indicator of business performance. But to get a true view, we also need to consider other information. Still, note that Global Business Travel Group is showing 2 warning signs in our investment analysis and 1 of them cannot be ignored…

If you like buying stocks along with management, you might like it free list of companies. (Hint: insiders have been buying them).

Note that the market returns quoted in this article reflect the weighted average market returns for stocks currently trading on US exchanges.

Valuation is complex, but we’re helping to make it simple.

Find out if Global Business Travel Group is potentially overvalued or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and caveats, dividends, insider trading and financial health.

Check out the free analysis

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares, nor does it take into account your goals or financial situation. We aim to provide you with long-term focused analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company listings or qualitative material. Simply Wall St has no position in any of the stocks mentioned.

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