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LogicBio Therapeutics' (NASDAQ:LOGC) Stock Price Has Reduced 22% In The Past Year

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The simplest way to benefit from a rising market is to buy an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. Investors in LogicBio Therapeutics, Inc. (NASDAQ:LOGC) have tasted that bitter downside in the last year, as the share price dropped 22%. That's well below the market return of 53%. LogicBio Therapeutics hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time. It's down 46% in about a quarter. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.

View our latest analysis for LogicBio Therapeutics

LogicBio Therapeutics recorded just US$2,894,000 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. This state of affairs suggests that venture capitalists won't provide funds on attractive terms. 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. It seems likely some shareholders believe that LogicBio Therapeutics has the funding to invent a new product before too long.

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 companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing.

LogicBio Therapeutics had cash in excess of all liabilities of US$44m when it last reported (March 2021). While that's nothing to panic about, there is some possibility the company will raise more capital, especially if profits are not imminent. With the share price down 22% 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 LogicBio Therapeutics' cash levels have changed over time (click to see the values).

debt-equity-history-analysis
debt-equity-history-analysis

In reality it's hard to have much certainty when valuing a business that has neither revenue or profit. What if insiders are ditching the stock hand over fist? I would feel more nervous about the company if that were so. It only takes a moment for you to check whether we have identified any insider sales recently.

A Different Perspective

While LogicBio Therapeutics shareholders are down 22% for the year, the market itself is up 53%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. It's worth noting that the last three months did the real damage, with a 46% decline. This probably signals that the business has recently disappointed shareholders - it will take time to win them back. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider risks, for instance. Every company has them, and we've spotted 4 warning signs for LogicBio Therapeutics you should know about.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.