INSG stock: 5G stock | 5 year over 700% return | over 28% plunge on March 2, 2021

 Fact 1: down 27.9%

Shares of Inseego (NASDAQ:INSG), a provider of mobile networking gear for 5G and 4G telephony, were slipping today as the company warned that sales growth would slow as the demand for 4G begins to fade.

As of 1:25 p.m. EST, Inseego stock was down 27.9%.

The company delivered another strong round of results for the fourth quarter as it's benefited from the work-from-home shift over the last year.

Revenue jumped 64.4% in the quarter to $86.1 million, beating estimates at $83.8 million. The Internet of Things (IoT) and mobile solutions segment drove the growth once again as demand for its networking hardware was strong. Revenue in that category nearly doubled to $72.1 million, and the company said 5G products accounted for more than 30% of hardware sales in the quarter.

On the bottom line, its adjusted loss per share came in at $0.07, which matched estimates.

CEO Dan Mondor said, "2020 was an epic year for Inseego in every respect, as we launched our groundbreaking 5G products with mobile operators on four continents, shipped our first fixed wireless access products, unveiled a suite of powerful SaaS cloud solutions and posted record revenues."

However, what seemed to spook investors was the company's warning on the earnings call, saying that it saw lower demand from 4G products in 2021, especially in the first half of the year, as it said 2021 would mark a transition from 4G to 5G.

At least three analysts downgraded the stock to hold on the news as it implied that 2021 growth would be slower than expected.

Now what

Management did not give specific guidance for the quarter or the year, but fourth-quarter revenue declined from the previous quarter, indicating that the boost from the work-from-home movement may have peaked. Analysts had been calling for 16% revenue growth in 2021, but they will likely revise that figure downward after the update on 4G demand.

While Inseego still looks to be a smart way to play the 5G revolution, investors should remember that the stock is up a healthy 53% over the last year even after today's slide. Investors looking for more upside will have to be patient at this point.

Fact 2: Five Years Ago You'd Have Earned 758% Returns

Inseego Corp. (NASDAQ:INSG) shareholders have seen the share price descend 21% over the month. But that doesn't change the fact that the returns over the last half decade have been spectacular. Indeed, the share price is up a whopping 758% in that time. So it might be that some shareholders are taking profits after good performance. But the real question is whether the business fundamentals can improve over the long term.

It really delights us to see such great share price performance for investors.

View our latest analysis for Inseego

Inseego isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

For the last half decade, Inseego can boast revenue growth at a rate of 0.2% per year. That's not a very high growth rate considering the bottom line. So shareholders should be pretty elated with the 54% increase per year, in that time. We'll tip our hats to that, any day, but the top-line growth isn't particularly impressive when you compare it to other pre-profit companies. It's not immediately obvious to us why the market has been so enthusiastic about the stock, but a more detailed look at revenue and profit trends might reveal why shareholders are optimistic.

INSG - Fundamentals