Despegar.com, Corp. (NYSE:DESP) shareholders have seen a welcome increase in the share price of 49% in the last quarter. However, this short-term gain does not change the fact that the returns over the longer term (five years) have been quite poor. In fact, the share price has declined by 63% during this period, which is a significant disappointment for shareholders.
The recent week has been somewhat reassuring for shareholders, but the overall performance over the last five years remains negative. This raises the question of whether the underlying business is responsible for this decline. Since Despegar.com reported a loss in the last twelve months, it is likely that the market is more focused on revenue and revenue growth for now.
It is generally expected that unprofitable companies will show strong revenue growth. However, Despegar.com has actually experienced a decline in its trailing twelve month revenue by 6.5% each year over the past five years. This lack of revenue growth, combined with the absence of profit growth, is not a positive sign for investors.
Despite the recent increase in share price, the chances of immediate investor enthusiasm for this stock seem slim. However, if the company is able to improve its revenue figures, it may have a positive impact on the share price in the future.
Please note that the market returns mentioned in this article reflect the weighted average returns of stocks currently traded on American exchanges.