DermTech (NASDAQ:DMTK investor one-year losses grow to 89% as the stock sheds US$8.8m this past week
Even the best investor on earth makes unsuccessful investments. But it should be a priority to avoid stomach churning catastrophes, wherever possible. So we hope that those who held DermTech, Inc. (NASDAQ:DMTK) during the last year don't lose the lesson, in addition to the 89% hit to the value of their shares. A loss like this is a stark reminder that portfolio diversification is important. Notably, shareholders had a tough run over the longer term, too, with a drop of 85% in the last three years. Shareholders have had an even rougher run lately, with the share price down 57% in the last 90 days. 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 DermTech has shed US$8.8m 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 DermTech
Given that DermTech didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last twelve months, DermTech increased its revenue by 36%. We think that is pretty nice growth. However, it seems like the market wanted more, since the share price is down 89%. It could be that the losses are too much for investors to handle without losing their nerve. We'd posit that the future looks challenging, given the disconnect between revenue growth and the share price.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. If you are thinking of buying or selling DermTech stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
The last twelve months weren't great for DermTech shares, which performed worse than the market, costing holders 89%. Meanwhile, the broader market slid about 21%, likely weighing on the stock. The three-year loss of 23% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. It's always interesting to track share price performance over the longer term. But to understand DermTech better, we need to consider many other factors. For example, we've discovered 3 warning signs for DermTech (1 can't be ignored!) that you should be aware of before investing here.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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.
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