We believe investing is smart because history shows that stock markets go higher in the long term. But not every stock you buy will perform as well as the overall market. Over the last year the RAPT Therapeutics, Inc. (NASDAQ:RAPT) share price is up 33%, but that's less than the broader market return. Note that businesses generally develop over the long term, so the returns over the last year might not reflect a long term trend.
Given that RAPT Therapeutics 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. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Over the last twelve months, RAPT Therapeutics' revenue grew by 470%. That's well above most other pre-profit companies. Let's face it the 33% share price gain in that time is underwhelming compared to the growth. When revenue spikes but the share price doesn't we can't help wondering if the market is missing something. It's possible that the market is worried about the losses, or simply that the growth was already priced in. Or, this could be worth adding to your watchlist.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. If you are thinking of buying or selling RAPT Therapeutics stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
We're happy to report that RAPT Therapeutics are up 33% over the year. While it's always nice to make a profit on the stock market, we do note that the TSR was no better than the broader market return of about 37%. Shareholders are doubtless excited that the stock price has been doing even better lately, with a gain of 57% in just ninety days. It's worth taking note when returns accelerate, as it can indicate positive change in the underlying business, and winners often keep winning. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should learn about the 4 warning signs we've spotted with RAPT Therapeutics (including 1 which shouldn't be ignored) .
RAPT Therapeutics 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.
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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