Investors one-year losses grow to 69% as the stock sheds US$297m this past week

Investing in stocks comes with the risk that the share price will fall. Unfortunately, shareholders of Schrödinger, Inc. (NASDAQ:SDGR) have suffered share price declines over the last year. The share price has slid 69% in that time. Because Schrödinger hasn't been listed for many years, the market is still learning about how the business performs. Furthermore, it's down 49% in about a quarter. That's not much fun for holders.

If the past week is anything to go by, investor sentiment for Schrödinger isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

View our latest analysis for Schrödinger

Schrödinger isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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 Schrödinger saw its revenue grow by 24%. We think that is pretty nice growth. Meanwhile, the share price tanked 69%, suggesting the market had much higher expectations. It is of course possible that the business will still deliver strong growth, it will just take longer than expected to do it. To our minds it isn't enough to just look at revenue, anyway. Always consider when profits will flow.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

This free interactive report on Schrödinger's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Given that the market gained 12% in the last year, Schrödinger shareholders might be miffed that they lost 69%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. With the stock down 49% 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. 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. Even so, be aware that Schrödinger is showing 2 warning signs in our investment analysis , you should know about...

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.