Investing in stocks comes with the risk that the share price will fall. And there’s no doubt that Wave Life Sciences Ltd. (NASDAQ:WVE) stock has had a really bad year. The share price is down a hefty 55% in that time. Longer term shareholders haven’t suffered as badly, since the stock is down a comparatively less painful 11% in three years. The falls have accelerated recently, with the share price down 14% 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.
Wave Life Sciences isn’t a profitable company, so it is unlikely we’ll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That’s because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last year Wave Life Sciences saw its revenue grow by 115%. That’s well above most other pre-profit companies. In contrast the share price is down 55% over twelve months. Yes, the market can be a fickle mistress. 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). We’d definitely consider it a positive if the company is trending towards profitability. If you can see that happening, then perhaps consider adding this stock to your watchlist.
If you are thinking of buying or selling Wave Life Sciences stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
Over the last year, Wave Life Sciences shareholders took a loss of 55%. In contrast the market gained about 2.2%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. The three-year loss of 3.9% per year isn’t as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.
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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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.