As every investor would know, not every swing hits the sweet spot. But you want to avoid the really big losses like the plague. So take a moment to sympathize with the long term shareholders of Autolus Therapeutics plc (NASDAQ:AUTL), who have seen the share price tank a massive 76% over a three year period. That would be a disturbing experience. The more recent news is of little comfort, with the share price down 40% in a year. But it’s up 6.5% in the last week.
It’s worthwhile assessing if the company’s economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let’s do just that.
With just US$2,998,000 worth of revenue in twelve months, we don’t think the market considers Autolus Therapeutics to have proven its business plan. This state of affairs suggests that venture capitalists won’t provide funds on attractive terms. As a result, we think it’s unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. It seems likely some shareholders believe that Autolus Therapeutics has the funding to invent a new product before too long.
Companies that lack both meaningful revenue and profits are usually considered high risk. There is almost always a chance they will need to raise more capital, and their progress – and share price – will dictate how dilutive that is to current holders. While some companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. Some Autolus Therapeutics investors have already had a taste of the bitterness stocks like this can leave in the mouth.
When it last reported its balance sheet in June 2021, Autolus Therapeutics had cash in excess of all liabilities of US$169m. While that’s nothing to panic about, there is some possibility the company will raise more capital, especially if profits are not imminent. With the share price down 21% per year, over 3 years , it seems likely that the need for cash is weighing on investors’ minds. You can click on the image below to see (in greater detail) how Autolus Therapeutics’ cash levels have changed over time.
Of course, the truth is that it is hard to value companies without much revenue or profit. What if insiders are ditching the stock hand over fist? I would feel more nervous about the company if that were so. You can click here to see if there are insiders selling.
A Different Perspective
Over the last year, Autolus Therapeutics shareholders took a loss of 40%. In contrast the market gained about 32%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The three-year loss of 21% 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. It’s always interesting to track share price performance over the longer term. But to understand Autolus Therapeutics better, we need to consider many other factors. For example, we’ve discovered 3 warning signs for Autolus Therapeutics that you should be aware of before investing here.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will 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.
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.
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