If You Had Bought Infinity Pharmaceuticals (NASDAQ:INFI) Shares A Year Ago You'd Have Earned 285% Returns
Unless you borrow money to invest, the potential losses are limited. But if you pick the right business to buy shares in, you can make more than you can lose. For example, the Infinity Pharmaceuticals, Inc. (NASDAQ:INFI) share price has soared 285% return in just a single year. On top of that, the share price is up 62% in about a quarter. This could be related to the recent financial results, released recently - you can catch up on the most recent data by reading our company report. Also impressive, the stock is up 61% over three years, making long term shareholders happy, too.
See our latest analysis for Infinity Pharmaceuticals
Infinity Pharmaceuticals recorded just US$1,719,000 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. As a result, we think it's unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. For example, they may be hoping that Infinity Pharmaceuticals comes up with a great new product, before it runs out of money.
As a general rule, if a company doesn't have much revenue, and it loses money, then it is a high risk investment. 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. Infinity Pharmaceuticals has already given some investors a taste of the sweet gains that high risk investing can generate, if your timing is right.
Our data indicates that Infinity Pharmaceuticals had US$28m more in total liabilities than it had cash, when it last reported in December 2020. That makes it extremely high risk, in our view. So we're surprised to see the stock up 60% in the last year , but we're happy for holders. Investors must really like its potential. You can see in the image below, how Infinity Pharmaceuticals' cash levels have changed over time (click to see the values).
It can be extremely risky to invest in a company that doesn't even have revenue. There's no way to know its value easily. Given that situation, many of the best investors like to check if insiders have been buying shares. It's usually a positive if they have, as it may indicate they see value in the stock. You can click here to see if there are insiders buying.
A Different Perspective
It's good to see that Infinity Pharmaceuticals has rewarded shareholders with a total shareholder return of 285% in the last twelve months. Notably the five-year annualised TSR loss of 7% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand Infinity Pharmaceuticals better, we need to consider many other factors. Case in point: We've spotted 6 warning signs for Infinity Pharmaceuticals you should be aware of, and 3 of them are a bit concerning.
We will like Infinity Pharmaceuticals 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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