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Announcing: Adverum Biotechnologies (NASDAQ:ADVM) Stock Increased An Energizing 264% In The Last Three Years

Simply Wall St

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But in contrast you can make much more than 100% if the company does well. To wit, the Adverum Biotechnologies, Inc. (NASDAQ:ADVM) share price has flown 264% in the last three years. That sort of return is as solid as granite. In more good news, the share price has risen 4.5% in thirty days. This could be related to the recent financial results that were recently released - you could check the most recent data by reading our company report.

Check out our latest analysis for Adverum Biotechnologies

Adverum Biotechnologies recorded just US$320,000 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. As a result, we think it's unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. It seems likely some shareholders believe that Adverum Biotechnologies has the funding to invent a new product before too long.

As a general rule, if a company doesn't have much revenue, and it loses money, then it is a high risk investment. There is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets. So the share price itself impacts the value of the shares (as it determines the cost of capital). While some such companies do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized). Of course, if you time it right, high risk investments like this can really pay off, as Adverum Biotechnologies investors might know.

Adverum Biotechnologies had cash in excess of all liabilities of US$121m when it last reported (September 2019). While that's nothing to panic about, there is some possibility the company will raise more capital, especially if profits are not imminent. Given the share price has increased by a solid 63% per year, over 3 years , its fair to say investors remain excited about the future, despite the potential need for cash. You can click on the image below to see (in greater detail) how Adverum Biotechnologies's cash levels have changed over time. The image below shows how Adverum Biotechnologies's balance sheet has changed over time; if you want to see the precise values, simply click on the image.

NasdaqGM:ADVM Historical Debt, December 2nd 2019
NasdaqGM:ADVM Historical Debt, December 2nd 2019

It can be extremely risky to invest in a company that doesn't even have revenue. There's no way to know its value easily. However you can take a look at whether insiders have been buying up shares. It's usually a positive if they have, as it may indicate they see value in the stock. You can click here to see if there are insiders buying.

A Different Perspective

It's nice to see that Adverum Biotechnologies shareholders have received a total shareholder return of 190% over the last year. There's no doubt those recent returns are much better than the TSR loss of 24% per year over five years. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

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

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.