Over the last month the Delivery Hero SE (ETR:DHER) has been much stronger than before, rebounding by 35%. But that is small recompense for the exasperating returns over three years. In that time, the share price dropped 68%. So it's good to see it climbing back up. Perhaps the company has turned over a new leaf.

Since Delivery Hero has shed €279m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Delivery Hero

Delivery Hero wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last three years, Delivery Hero saw its revenue grow by 50% per year, compound. That's well above most other pre-profit companies. The share price has moved in quite the opposite direction, down 19% over that time, a bad result. This could mean hype has come out of the stock because the losses are concerning investors. But a share price drop of that magnitude could well signal that the market is overly negative on the stock.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

Delivery Hero is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. If you are thinking of buying or selling Delivery Hero stock, you should check out this free report showing analyst consensus estimates for future profits.

A Different Perspective

While the broader market gained around 5.5% in the last year, Delivery Hero shareholders lost 20%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 0.9% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified 2 warning signs for Delivery Hero that you should be aware of.

Of course Delivery Hero may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on German exchanges.

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This article by Simply Wall St 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 any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.