LifeMD's (NASDAQ:LFMD) growing losses don't faze investors as the stock rallies 12% this past week

By
Simply Wall St
Published
February 16, 2022
NasdaqGM:LFMD
Source: Shutterstock

It hasn't been the best quarter for LifeMD, Inc. (NASDAQ:LFMD) shareholders, since the share price has fallen 15% in that time. But over the last three years the stock has shone bright like a diamond. In fact, the share price has taken off in that time, up 425%. As long term investors the recent fall doesn't detract all that much from the longer term story. Only time will tell if there is still too much optimism currently reflected in the share price.

The past week has proven to be lucrative for LifeMD investors, so let's see if fundamentals drove the company's three-year performance.

Check out our latest analysis for LifeMD

LifeMD isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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.

Over the last three years LifeMD has grown its revenue at 82% annually. That's much better than most loss-making companies. In light of this attractive revenue growth, it seems somewhat appropriate that the share price has been rocketing, boasting a gain of 74% per year, over the same period. It's always tempting to take profits after a share price gain like that, but high-growth companies like LifeMD can sometimes sustain strong growth for many years. So we'd recommend you take a closer look at this one, or even put it on your watchlist.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth
NasdaqGM:LFMD Earnings and Revenue Growth February 16th 2022

It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. So it makes a lot of sense to check out what analysts think LifeMD will earn in the future (free profit forecasts).

A Different Perspective

While the broader market gained around 3.7% in the last year, LifeMD shareholders lost 87%. 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. Longer term investors wouldn't be so upset, since they would have made 24%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand LifeMD better, we need to consider many other factors. Case in point: We've spotted 5 warning signs for LifeMD you should be aware of, and 2 of them make us uncomfortable.

LifeMD is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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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