Further weakness as Revolution Medicines (NASDAQ:RVMD) drops 4.7% this week, taking one-year losses to 30%
Investors can approximate the average market return by buying an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. For example, the Revolution Medicines, Inc. (NASDAQ:RVMD) share price is down 30% in the last year. That falls noticeably short of the market decline of around 6.7%. Revolution Medicines hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time. Unfortunately the share price momentum is still quite negative, with prices down 23% in thirty days. We do note, however, that the broader market is down 9.5% in that period, and this may have weighed on the share price.
After losing 4.7% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.
Check out our latest analysis for Revolution Medicines
Given that Revolution Medicines 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In just one year Revolution Medicines saw its revenue fall by 32%. That looks pretty grim, at a glance. Shareholders have seen the share price drop 30% in that time. That seems pretty reasonable given the lack of both profits and revenue growth. It's hard to escape the conclusion that buyers must envision either growth down the track, cost cutting, or both.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
This free interactive report on Revolution Medicines' balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
We doubt Revolution Medicines shareholders are happy with the loss of 30% over twelve months. That falls short of the market, which lost 6.7%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. The share price decline has continued throughout the most recent three months, down 4.8%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. 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. Take risks, for example - Revolution Medicines has 3 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.
We will like Revolution Medicines 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.
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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.
