Gritstone bio (NASDAQ:GRTS) shareholders have endured a 70% loss from investing in the stock three years ago
It's not possible to invest over long periods without making some bad investments. But really big losses can really drag down an overall portfolio. So spare a thought for the long term shareholders of Gritstone bio, Inc. (NASDAQ:GRTS); the share price is down a whopping 70% in the last three years. That might cause some serious doubts about the merits of the initial decision to buy the stock, to put it mildly. Furthermore, it's down 21% in about a quarter. That's not much fun for holders.
It's worthwhile assessing if the company's economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let's do just that.
See our latest analysis for Gritstone bio
Given that Gritstone bio 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Over three years, Gritstone bio grew revenue at 20% per year. That is faster than most pre-profit companies. So why has the share priced crashed 19% per year, in the same time? The share price makes us wonder if there is an issue with profitability. Ultimately, revenue growth doesn't amount to much if the business can't scale well. Unless the balance sheet is strong, the company might have to raise capital.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
If you are thinking of buying or selling Gritstone bio stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
Over the last year, Gritstone bio shareholders took a loss of 19%. In contrast the market gained about 16%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, the longer term story isn't pretty, with investment losses running at 19% per year over three years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. It's always interesting to track share price performance over the longer term. But to understand Gritstone bio better, we need to consider many other factors. For example, we've discovered 5 warning signs for Gritstone bio (2 are concerning!) that you should be aware of before investing here.
We will like Gritstone bio 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 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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