Even after rising 12% this past week, Lyell Immunopharma (NASDAQ:LYEL) shareholders are still down 31% over the past year
Over the last month the Lyell Immunopharma, Inc. (NASDAQ:LYEL) has been much stronger than before, rebounding by 54%. But that doesn't change the fact that the returns over the last year have been less than pleasing. The cold reality is that the stock has dropped 31% in one year, under-performing the market.
On a more encouraging note the company has added US$87m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.
View our latest analysis for Lyell Immunopharma
Lyell Immunopharma wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last year Lyell Immunopharma saw its revenue grow by 861%. That's a strong result which is better than most other loss making companies. Given the revenue growth, the share price drop of 31% seems quite harsh. Our sympathies to shareholders who are now underwater. Prima facie, revenue growth like that should be a good thing, so it's worth checking whether losses have stabilized. Our brains have evolved to think in linear fashion, so there's value in learning to recognize exponential growth. We are, in some ways, simply the wisest of the monkeys.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
If you are thinking of buying or selling Lyell Immunopharma stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
Given that the market gained 1.6% in the last year, Lyell Immunopharma shareholders might be miffed that they lost 31%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. It's great to see a nice little 44% rebound in the last three months. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). 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 3 warning signs with Lyell Immunopharma (at least 1 which is a bit concerning) , and understanding them should be part of your investment process.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American 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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