Even the best stock pickers will make plenty of bad investments. Anyone who held Karyopharm Therapeutics Inc. (NASDAQ:KPTI) over the last year knows what a loser feels like. The share price is down a hefty 51% in that time. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 29% in three years. Furthermore, it's down 35% in about a quarter. That's not much fun for holders.
Because Karyopharm Therapeutics made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. 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.
In the last twelve months, Karyopharm Therapeutics increased its revenue by 163%. That's a strong result which is better than most other loss making companies. Meanwhile, the share price slid 51%. Typically a growth stock like this will be volatile, with some shareholders concerned about the red ink on the bottom line (that is, the losses). Generally speaking investors would consider a stock like this less risky once it turns a profit. But when do you think that will happen?
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. You can see what analysts are predicting for Karyopharm Therapeutics in this interactive graph of future profit estimates.
A Different Perspective
Investors in Karyopharm Therapeutics had a tough year, with a total loss of 51%, against a market gain of about 61%. 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. On the bright side, long term shareholders have made money, with a gain of 2% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for Karyopharm Therapeutics you should know about.
Karyopharm Therapeutics is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
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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