Even the best investor on earth makes unsuccessful investments. But it should be a priority to avoid stomach churning catastrophes, wherever possible. So we hope that those who held Burning Rock Biotech Limited (NASDAQ:BNR) during the last year don't lose the lesson, in addition to the 90% hit to the value of their shares. That'd be a striking reminder about the importance of diversification. We wouldn't rush to judgement on Burning Rock Biotech because we don't have a long term history to look at. The falls have accelerated recently, with the share price down 56% in the last three months. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report. While a drop like that is definitely a body blow, money isn't as important as health and happiness.
With the stock having lost 22% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.
Given that Burning Rock Biotech didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Burning Rock Biotech grew its revenue by 18% over the last year. We think that is pretty nice growth. However, it seems like the market wanted more, since the share price is down 90%. One fear might be that the company might be losing too much money and will need to raise more. It seems that the market has concerns about the future, because that share price action does not seem to reflect the revenue growth at all.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
This free interactive report on Burning Rock Biotech's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Burning Rock Biotech shareholders are down 90% for the year, even worse than the market loss of 9.0%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. With the stock down 56% 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. To that end, you should learn about the 3 warning signs we've spotted with Burning Rock Biotech (including 1 which is a bit concerning) .
But note: Burning Rock Biotech 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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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.