Investors can approximate the average market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Investors in Avidity Biosciences, Inc. (NASDAQ:RNA) have tasted that bitter downside in the last year, as the share price dropped 41%. That falls noticeably short of the market decline of around 11%. Avidity Biosciences hasn’t been listed for long, so although we’re wary of recent listings that perform poorly, it may still prove itself with time. Shareholders have had an even rougher run lately, with the share price down 21% in the last 90 days. This could be related to the recent financial results – you can catch up on the most recent data by reading our company report.
With the stock having lost 10% in the past week, it’s worth taking a look at business performance and seeing if there’s any red flags.
View our latest analysis for Avidity Biosciences
Given that Avidity Biosciences 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. 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 Avidity Biosciences saw its revenue grow by 3.5%. While that may seem decent it isn’t great considering the company is still making a loss. Given this fairly low revenue growth (and lack of profits), it’s not particularly surprising to see the stock down 41% in a year. In a hot market it’s easy to forget growth is the life-blood of a loss making company. So remember, if you buy a profitless company then you risk being a profitless investor.
The company’s revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Take a more thorough look at Avidity Biosciences’ financial health with this free report on its balance sheet.
A Different Perspective
We doubt Avidity Biosciences shareholders are happy with the loss of 41% over twelve months. That falls short of the market, which lost 11%. There’s no doubt that’s a disappointment, but the stock may well have fared better in a stronger market. With the stock down 21% over the last three months, the market doesn’t seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we’d remain pretty wary until we see some strong business performance. It’s always interesting to track share price performance over the longer term. But to understand Avidity Biosciences better, we need to consider many other factors. Like risks, for instance. Every company has them, and we’ve spotted 4 warning signs for Avidity Biosciences (of which 1 doesn’t sit too well with us!) you should know about.
We will like Avidity Biosciences 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.
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