Shareholders in Exagen (NASDAQ:XGN) have lost 61%, as stock drops 15% this past week
Investing in stocks comes with the risk that the share price will fall. Unfortunately, shareholders of Exagen Inc. (NASDAQ:XGN) have suffered share price declines over the last year. The share price is down a hefty 61% in that time. Exagen may have better days ahead, of course; we've only looked at a one year period. The falls have accelerated recently, with the share price down 35% 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 Exagen has shed US$18m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.
View our latest analysis for Exagen
Because Exagen made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last year Exagen saw its revenue grow by 15%. We think that is pretty nice growth. Meanwhile, the share price tanked 61%, suggesting the market had much higher expectations. It may well be that the business remains approximately on track, but its revenue growth has simply been delayed. For us it's important to consider when you think a company will become profitable, if you're basing your valuation on revenue.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
If you are thinking of buying or selling Exagen stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
While Exagen shareholders are down 61% for the year, the market itself is up 0.4%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The share price decline has continued throughout the most recent three months, down 35%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. 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. Take risks, for example - Exagen has 2 warning signs we think you should be aware of.
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.
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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.
