Did Changing Sentiment Drive Aerie Pharmaceuticals’s (NASDAQ:AERI) Share Price Down A Worrying 55%?

If you love investing in stocks you’re bound to buy some losers. But the long term shareholders of Aerie Pharmaceuticals, Inc. (NASDAQ:AERI) have had an unfortunate run in the last three years. Unfortunately, they have held through a 55% decline in the share price in that time. And over the last year the share price fell 50%, so we doubt many shareholders are delighted. Unfortunately the share price momentum is still quite negative, with prices down 11% in thirty days.

See our latest analysis for Aerie Pharmaceuticals

Aerie Pharmaceuticals isn’t currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn’t make profits, we’d generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

NasdaqGM:AERI Income Statement, February 21st 2020
NasdaqGM:AERI Income Statement, February 21st 2020

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

Investors in Aerie Pharmaceuticals had a tough year, with a total loss of 50%, against a market gain of about 22%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year’s performance caps off a bad run, with the shareholders facing a total loss of 6.7% per year over five years. We realise that Buffett has said investors should ‘buy when there is blood on the streets’, but we caution that investors should first be sure they are buying a high quality business. 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. Consider risks, for instance. Every company has them, and we’ve spotted 2 warning signs for Aerie Pharmaceuticals you should know about.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are 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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