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Investors Who Bought Alpine Immune Sciences (NASDAQ:ALPN) Shares A Year Ago Are Now Down 43%

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Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. Investors in Alpine Immune Sciences, Inc. (NASDAQ:ALPN) have tasted that bitter downside in the last year, as the share price dropped 43%. That falls noticeably short of the market return of around 6.0%. Alpine Immune Sciences hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time. Shareholders have had an even rougher run lately, with the share price down 35% in the last 90 days.

See our latest analysis for Alpine Immune Sciences

Alpine Immune Sciences recorded just US$390,000 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. You have to wonder why venture capitalists aren't funding it. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. For example, they may be hoping that Alpine Immune Sciences comes up with a great new product, before it runs out of money.

We think companies that have neither significant revenues nor profits are pretty high risk. You should be aware that there is always a chance that this sort of company will need to issue more shares to raise money to continue pursuing its business plan. While some such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt.

Alpine Immune Sciences had cash in excess of all liabilities of US$53m when it last reported (March 2019). That's not too bad but management may have to think about raising capital or taking on debt, unless the company is close to breaking even. With the share price down 43% in the last year, it seems likely that the need for cash is weighing on investors' minds. You can see in the image below, how Alpine Immune Sciences's cash levels have changed over time (click to see the values).

NasdaqGM:ALPN Historical Debt, June 23rd 2019
NasdaqGM:ALPN Historical Debt, June 23rd 2019

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. Would it bother you if insiders were selling the stock? I'd like that just about as much as I like to drink milk and fruit juice mixed together. It only takes a moment for you to check whether we have identified any insider sales recently.

A Different Perspective

Given that the market gained 6.0% in the last year, Alpine Immune Sciences shareholders might be miffed that they lost 43%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock down 35% 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 is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.

Alpine Immune Sciences 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.

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