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Did You Manage To Avoid Retrophin's (NASDAQ:RTRX) 46% Share Price Drop?

Simply Wall St

Retrophin, Inc. (NASDAQ:RTRX) shareholders should be happy to see the share price up 11% in the last quarter. But that doesn't change the fact that the returns over the last year have been less than pleasing. After all, the share price is down 46% in the last year, significantly under-performing the market.

View our latest analysis for Retrophin

Because Retrophin is loss-making, 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

Retrophin grew its revenue by 6.0% over the last year. While that may seem decent it isn't great considering the company is still making a loss. Given this lacklustre revenue growth, the share price drop of 46% seems pretty appropriate. It's important not to lose sight of the fact that profitless companies must grow. So remember, if you buy a profitless company then you risk being a profitless investor.

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

NasdaqGM:RTRX Income Statement, December 12th 2019

Take a more thorough look at Retrophin's financial health with this free report on its balance sheet.

A Different Perspective

Investors in Retrophin had a tough year, with a total loss of 46%, against a market gain of about 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. Longer term investors wouldn't be so upset, since they would have made 0.6%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. Before spending more time on Retrophin it might be wise to click here to see if insiders have been buying or selling shares.

But note: Retrophin may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.