Investors one-year losses grow to 70% as the stock sheds US$29m this past week

By
Simply Wall St
Published
November 10, 2021
NasdaqGS:AFIB
Source: Shutterstock

Investing in stocks comes with the risk that the share price will fall. Unfortunately, shareholders of Acutus Medical, Inc. (NASDAQ:AFIB) have suffered share price declines over the last year. The share price is down a hefty 70% in that time. Acutus Medical hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time. Furthermore, it's down 44% in about a quarter. That's not much fun for holders.

With the stock having lost 12% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

Check out our latest analysis for Acutus Medical

Because Acutus Medical 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. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last year Acutus Medical saw its revenue grow by 248%. That's well above most other pre-profit companies. In contrast the share price is down 70% over twelve months. Yes, the market can be a fickle mistress. Typically a growth stock like this will be volatile, with some shareholders concerned about the red ink on the bottom line (that is, the losses). We'd definitely consider it a positive if the company is trending towards profitability. If you can see that happening, then perhaps consider adding this stock to your watchlist.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
NasdaqGS:AFIB Earnings and Revenue Growth November 11th 2021

Take a more thorough look at Acutus Medical's financial health with this free report on its balance sheet.

A Different Perspective

While Acutus Medical shareholders are down 70% for the year, the market itself is up 31%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock down 44% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. 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 Acutus Medical (1 is a bit unpleasant!) that you should be aware of before investing here.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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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