Adaptimmune Therapeutics (NASDAQ:ADAP shareholders incur further losses as stock declines 22% this week, taking three-year losses to 88%
This month, we saw the Adaptimmune Therapeutics plc (NASDAQ:ADAP) up an impressive 58%. But only the myopic could ignore the astounding decline over three years. Indeed, the share price is down a whopping 88% in the last three years. So it sure is nice to see a bit of an improvement. The thing to think about is whether the business has really turned around. We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.
Since Adaptimmune Therapeutics has shed US$47m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.
See our latest analysis for Adaptimmune Therapeutics
Because Adaptimmune Therapeutics made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last three years, Adaptimmune Therapeutics saw its revenue grow by 102% per year, compound. That is faster than most pre-profit companies. So on the face of it we're really surprised to see the share price down 23% a year in the same time period. You'd want to take a close look at the balance sheet, as well as the losses. Sometimes fast revenue growth doesn't lead to profits. If the company is low on cash, it may have to raise capital soon.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
This free interactive report on Adaptimmune Therapeutics' balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Investors in Adaptimmune Therapeutics had a tough year, with a total loss of 59%, against a market gain of about 19%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 13% per year over five years. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Adaptimmune Therapeutics (at least 1 which can't be ignored) , and understanding them should be part of your investment process.
We will like Adaptimmune Therapeutics better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
