Shareholders in indie Semiconductor (NASDAQ:INDI) have lost 78%, as stock drops 10% this past week

Some stocks are best avoided. We don't wish catastrophic capital loss on anyone. Anyone who held indie Semiconductor, Inc. (NASDAQ:INDI) for five years would be nursing their metaphorical wounds since the share price dropped 78% in that time. We also note that the stock has performed poorly over the last year, with the share price down 71%. Furthermore, it's down 48% in about a quarter. That's not much fun for holders.

If the past week is anything to go by, investor sentiment for indie Semiconductor isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

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Because indie Semiconductor 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. When a company doesn't make profits, we'd generally hope to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last half decade, indie Semiconductor saw its revenue increase by 48% per year. That's well above most other pre-profit companies. So it's not at all clear to us why the share price sunk 12% throughout that time. It could be that the stock was over-hyped before. We'd recommend carefully checking for indications of future growth - and balance sheet threats - before considering a purchase.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

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

A Different Perspective

While the broader market gained around 7.3% in the last year, indie Semiconductor shareholders lost 71%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 12% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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. For example, we've discovered 1 warning sign for indie Semiconductor that you should be aware of before investing here.

We will like indie Semiconductor better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American 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.