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If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. Long term Global Blood Therapeutics, Inc. (NASDAQ:GBT) shareholders know that all too well, since the share price is down considerably over three years. Sadly for them, the share price is down 58% in that time. The more recent news is of little comfort, with the share price down 36% in a year. Even worse, it's down 30% in about a month, which isn't fun at all. But this could be related to poor market conditions -- stocks are down 12% in the same time.
If the past week is anything to go by, investor sentiment for Global Blood Therapeutics isn't positive, so let's see if there's a mismatch between fundamentals and the share price.
Because Global Blood Therapeutics 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 it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last three years, Global Blood Therapeutics saw its revenue grow by 92% per year, compound. That is faster than most pre-profit companies. The share price has moved in quite the opposite direction, down 16% over that time, a bad result. It seems likely that the market is worried about the continual losses. But a share price drop of that magnitude could well signal that the market is overly negative on the stock.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Global Blood Therapeutics is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. If you are thinking of buying or selling Global Blood Therapeutics stock, you should check out this free report showing analyst consensus estimates for future profits.
A Different Perspective
We regret to report that Global Blood Therapeutics shareholders are down 36% for the year. Unfortunately, that's worse than the broader market decline of 9.8%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 5% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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. For example, we've discovered 3 warning signs for Global Blood Therapeutics that you should be aware of before investing here.
We will like Global Blood Therapeutics 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.