Further weakness as Lyra Therapeutics (NASDAQ:LYRA) drops 15% this week, taking one-year losses to 49%
It's easy to match the overall market return by buying an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Investors in Lyra Therapeutics, Inc. (NASDAQ:LYRA) have tasted that bitter downside in the last year, as the share price dropped 49%. That falls noticeably short of the market decline of around 21%. Because Lyra Therapeutics hasn't been listed for many years, the market is still learning about how the business performs. It's down 58% in about a quarter.
Since Lyra Therapeutics has shed US$13m 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 Lyra Therapeutics
Because Lyra Therapeutics made a loss in the last twelve months, 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. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Lyra Therapeutics grew its revenue by 11,493% over the last year. That's well above most other pre-profit companies. The share price drop of 49% over twelve months would be considered disappointing by many, so you might argue the company is getting little credit for its impressive revenue growth. On the bright side, if this company is moving profits in the right direction, top-line growth like that could be an opportunity. 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 company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. So it makes a lot of sense to check out what analysts think Lyra Therapeutics will earn in the future (free profit forecasts).
A Different Perspective
Lyra Therapeutics shareholders are down 49% for the year, even worse than the market loss of 21%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. It's worth noting that the last three months did the real damage, with a 58% decline. So it seems like some holders have been dumping the stock of late - and that's not bullish. 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. For example, we've discovered 5 warning signs for Lyra Therapeutics (2 don't sit too well with us!) that you should be aware of before investing here.
Lyra Therapeutics is not the only stock insiders are buying. So take a peek at this free list of growing companies with 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.
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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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