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Fusion Pharmaceuticals (NASDAQ:FUSN) shareholders have endured a 62% loss from investing in the stock a year ago

This month, we saw the Fusion Pharmaceuticals Inc. (NASDAQ:FUSN) up an impressive 43%. But that's not enough to compensate for the decline over the last twelve months. Like a receding glacier in a warming world, the share price has melted 62% in that period. Some might say the recent bounce is to be expected after such a bad drop. Of course, it could be that the fall was overdone.

Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.

View our latest analysis for Fusion Pharmaceuticals

With just US$2,074,000 worth of revenue in twelve months, we don't think the market considers Fusion Pharmaceuticals to have proven its business plan. This state of affairs suggests that venture capitalists won't provide funds on attractive terms. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. It seems likely some shareholders believe that Fusion Pharmaceuticals has the funding to invent a new product before too long.

As a general rule, if a company doesn't have much revenue, and it loses money, then it is a high risk investment. 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 such companies do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized). Fusion Pharmaceuticals has already given some investors a taste of the bitter losses that high risk investing can cause.

When it last reported its balance sheet in June 2022, Fusion Pharmaceuticals had cash in excess of all liabilities of US$169m. That's not too bad but management may have to think about raising capital or taking on debt, unless the company is close to breaking even. With the share price down 62% in the last year , 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 Fusion Pharmaceuticals' cash levels have changed over time.

debt-equity-history-analysis
debt-equity-history-analysis

In reality it's hard to have much certainty when valuing a business that has neither revenue or profit. Would it bother you if insiders were selling the stock? 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

Fusion Pharmaceuticals shareholders are down 62% for the year, even worse than the market loss of 23%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. It's great to see a nice little 21% rebound in the last three months. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). It's always interesting to track share price performance over the longer term. But to understand Fusion Pharmaceuticals better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Fusion Pharmaceuticals (at least 1 which is significant) , and understanding them should be part of your investment process.

But note: Fusion Pharmaceuticals may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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