Investors one-year losses grow to 38% as the stock sheds €76m this past week

By
Simply Wall St
Published
May 10, 2022
NasdaqCM:IMTX
Source: Shutterstock

It's easy to match the overall market return by buying an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. Investors in Immatics N.V. (NASDAQ:IMTX) have tasted that bitter downside in the last year, as the share price dropped 38%. That falls noticeably short of the market decline of around 10%. Even if you look out three years, the returns are still disappointing, with the share price down33% in that time. The falls have accelerated recently, with the share price down 31% in the last three months. However, one could argue that the price has been influenced by the general market, which is down 14% in the same timeframe.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

View our latest analysis for Immatics

Immatics 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last year Immatics saw its revenue grow by 11%. That's not a very high growth rate considering it doesn't make profits. Given this lacklustre revenue growth, the share price drop of 38% seems pretty appropriate. It's important not to lose sight of the fact that profitless companies must grow. But if you buy a loss making company then you could become a loss making investor.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth
NasdaqCM:IMTX Earnings and Revenue Growth May 10th 2022

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

A Different Perspective

Immatics shareholders are down 38% for the year, falling short of the market return. Meanwhile, the broader market slid about 10%, likely weighing on the stock. Shareholders have lost 10% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. 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 Immatics is showing 1 warning sign in our investment analysis , you should know about...

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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