Abeona Therapeutics (NASDAQ:ABEO shareholders incur further losses as stock declines 10% this week, taking three-year losses to 89%

By
Simply Wall St
Published
November 16, 2021
NasdaqCM:ABEO
Source: Shutterstock

As every investor would know, not every swing hits the sweet spot. But you have a problem if you face massive losses more than once in a while. So spare a thought for the long term shareholders of Abeona Therapeutics Inc. (NASDAQ:ABEO); the share price is down a whopping 89% in the last three years. That would be a disturbing experience. And over the last year the share price fell 32%, so we doubt many shareholders are delighted. The falls have accelerated recently, with the share price down 29% in the last three months. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report. While a drop like that is definitely a body blow, money isn't as important as health and happiness.

Since Abeona Therapeutics has shed US$9.4m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Abeona Therapeutics

Abeona Therapeutics recorded just US$3,000,000 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. We can't help wondering why it's publicly listed so early in its journey. Are venture capitalists not interested? As a result, we think it's unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. It seems likely some shareholders believe that Abeona Therapeutics has the funding to invent a new product before too long.

Companies that lack both meaningful revenue and profits are usually considered high risk. You should be aware that there is always a chance that this sort of company will need to issue more shares to raise money to continue pursuing its business plan. While some such companies do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized). It certainly is a dangerous place to invest, as Abeona Therapeutics investors might realise.

Abeona Therapeutics had cash in excess of all liabilities of just US$28m when it last reported (September 2021). So if it hasn't remedied the situation already, it will almost certainly have to raise more capital soon. With that in mind, you can understand why the share price dropped 24% per year, over 3 years. The image below shows how Abeona Therapeutics' balance sheet has changed over time; if you want to see the precise values, simply click on the image.

debt-equity-history-analysis
NasdaqCM:ABEO Debt to Equity History November 17th 2021

Of course, the truth is that it is hard to value companies without much revenue or profit. Given that situation, would you be concerned if it turned out insiders were relentlessly selling stock? It would bother me, that's for sure. It costs nothing but a moment of your time to see if we are picking up on any insider selling.

A Different Perspective

Investors in Abeona Therapeutics had a tough year, with a total loss of 32%, against a market gain of about 30%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. However, the loss over the last year isn't as bad as the 13% per annum loss investors have suffered over the last half decade. We'd need to see some sustained improvements in the key metrics before we could muster much enthusiasm. 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 5 warning signs for Abeona Therapeutics you should know about.

But note: Abeona Therapeutics may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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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