Ikena Oncology (NASDAQ:IKNA shareholders incur further losses as stock declines 16% this week, taking one-year losses to 79%
As every investor would know, you don't hit a homerun every time you swing. But serious investors should think long and hard about avoiding extreme losses. It must have been painful to be a Ikena Oncology, Inc. (NASDAQ:IKNA) shareholder over the last year, since the stock price plummeted 79% in that time. A loss like this is a stark reminder that portfolio diversification is important. Because Ikena Oncology hasn't been listed for many years, the market is still learning about how the business performs. The falls have accelerated recently, with the share price down 53% in the last three months. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.
Since Ikena Oncology has shed US$47m 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 Ikena Oncology
Ikena Oncology isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Ikena Oncology grew its revenue by 237% over the last year. That's well above most other pre-profit companies. So the hefty 79% share price crash makes us think the company has somehow offended market participants. There's clearly something unusual going on here such as an acquisition that hasn't delivered expected profits. We'd recommend taking a very close look at the stock (and any available forecasts), before considering a purchase, because the share price is not correlated with the revenue growth, that's for sure. Of course, investors do over-react when they are stressed out, so the sell-off could be unjustifiably severe.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free report showing analyst forecasts should help you form a view on Ikena Oncology
A Different Perspective
Given that the market gained 7.7% in the last year, Ikena Oncology shareholders might be miffed that they lost 79%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock down 53% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. It's always interesting to track share price performance over the longer term. But to understand Ikena Oncology better, we need to consider many other factors. Even so, be aware that Ikena Oncology is showing 4 warning signs in our investment analysis , and 1 of those can't be ignored...
We will like Ikena Oncology 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.
