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Did The Underlying Business Drive Adaptimmune Therapeutics' (NASDAQ:ADAP) Lovely 367% Share Price Gain?

Simply Wall St
·3 mins read

Adaptimmune Therapeutics plc (NASDAQ:ADAP) shareholders have seen the share price descend 14% over the month. But that doesn't change the fact that the returns over the last year have been spectacular. In fact, it is up 367% in that time. So the recent fall isn't enough to negate the good performance. Of course, winners often do keep winning, so there may be more gains to come (if the business fundamentals stack up).

See our latest analysis for Adaptimmune Therapeutics

Adaptimmune Therapeutics recorded just US$2,228,000 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). It seems likely some shareholders believe that Adaptimmune Therapeutics has the funding to invent a new product before too long.

Companies that lack both meaningful revenue and profits are usually considered high risk. There is almost always a chance they will need to raise more capital, and their progress - and share price - will dictate how dilutive that is to current holders. While some such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Of course, if you time it right, high risk investments like this can really pay off, as Adaptimmune Therapeutics investors might know.

When it last reported its balance sheet in June 2020, Adaptimmune Therapeutics could boast a strong position, with cash in excess of all liabilities of US$314m. This gives management the flexibility to drive business growth, without worrying too much about cash reserves. And with the share price up 52% in the last year , the market is focussed on that blue sky potential. The image below shows how Adaptimmune Therapeutics' balance sheet has changed over time; if you want to see the precise values, simply click on the image.

debt-equity-history-analysis
debt-equity-history-analysis

In reality it's hard to have much certainty when valuing a business that has neither revenue or profit. One thing you can do is check if company insiders are buying shares. If they are buying a significant amount of shares, that's certainly a good thing. Luckily we are in a position to provide you with this free chart of insider buying (and selling).

A Different Perspective

It's good to see that Adaptimmune Therapeutics has rewarded shareholders with a total shareholder return of 367% in the last twelve months. That certainly beats the loss of about 8.2% per year over the last half decade. 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should learn about the 6 warning signs we've spotted with Adaptimmune Therapeutics (including 1 which is is significant) .

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 US exchanges.

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. 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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