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Volatility 101: Should Syros Pharmaceuticals (NASDAQ:SYRS) Shares Have Dropped 37%?

Simply Wall St
·3 min read

Syros Pharmaceuticals, Inc. (NASDAQ:SYRS) shareholders should be happy to see the share price up 27% in the last month. But that doesn't change the fact that the returns over the last three years have been less than pleasing. In fact, the share price is down 37% in the last three years, falling well short of the market return.

See our latest analysis for Syros Pharmaceuticals

We don't think Syros Pharmaceuticals's revenue of US$1,982,000 is enough to establish significant demand. We can't help wondering why it's publicly listed so early in its journey. Are venture capitalists not interested? 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. For example, they may be hoping that Syros Pharmaceuticals 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 do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized).

Syros Pharmaceuticals had cash in excess of all liabilities of just US$21m when it last reported (December 2019). So if it has not already moved to replenish reserves, we think the near-term chances of a capital raising event are pretty high. That probably explains why the share price is down 14% per year, over 3 years. The image below shows how Syros Pharmaceuticals's balance sheet has changed over time; if you want to see the precise values, simply click on the image.

NasdaqGS:SYRS Historical Debt May 6th 2020
NasdaqGS:SYRS Historical Debt May 6th 2020

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? It would bother me, that's for sure. You can click here to see if there are insiders selling.

A Different Perspective

Pleasingly, Syros Pharmaceuticals's total shareholder return last year was 30%. That certainly beats the loss of about 14% per year over three years. We're generally cautious about putting too much weigh on shorter term data, but the recent improvement is definitely a positive. 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. For instance, we've identified 5 warning signs for Syros Pharmaceuticals (1 shouldn't be ignored) that you should be aware of.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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.

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. Thank you for reading.