A good week for shareholders of Studio City International Holdings (NYSE:MSC) does not ease the pain of the loss of three years

It’s nice to see the Studio City International Holdings Limited (NYSE:MSC) stock price is up 20% in one week. But that doesn’t change the fact that returns over the past three years have been stomach-churning. Indeed, the stock price has fallen 90% over the past three years. We are therefore relieved for long-term holders to see some improvement. The thing to think about is whether the business has truly recovered. While a drop like that is definitely a blow, money isn’t as important as health and happiness.

On a more encouraging note, the company added $72 million to its market capitalization in the last 7 days alone, so let’s see if we can work out what caused the three-year loss for shareholders.

Given that Studio City International Holdings has posted a loss over the past twelve months, we think the market is likely more focused on revenue and revenue growth, at least for now. Generally speaking, companies without profits should increase their revenue every year, and at a good pace. As you can imagine, rapid revenue growth, when sustained, often results in rapid profit growth.

Over the past three years, Studio City International Holdings’ revenue has fallen 82% annually. This is certainly a lower result than what most nonprofits report. The rapid decline in the share price, at a compound annual rate of 24%, reflects this weak fundamental performance. We prefer to leave it to the clowns to try and catch the falling knives, like this stock. There’s a good reason why investors often describe buying a sharply falling stock price as “trying to catch a falling knife.” Think about it.

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

NYSE: MSC Earnings and Revenue Growth September 20, 2022

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive chart.

A different perspective

The last twelve months have not been great for shares of Studio City International Holdings, which underperformed the market, costing holders 78%. Meanwhile, the broader market slipped around 15%, likely weighing on the stock. Shareholders have lost 24% annually over the past three years, so the share price decline has become more pronounced over the past year; a potential symptom of unresolved challenges. Although Baron Rothschild said “buy when there is blood in the streets, even if the blood is yours”, he also focuses on high quality stocks with strong prospects. 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. Example: we have identified 3 warning signs for Studio City International Holdings you should be aware of, and 1 of them is potentially serious.

Sure Studio City International Holdings may not be the best stock to buy. So you might want to see this free collection of growth values.

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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