Spero Therapeutics (NASDAQ:SPRO) adds US$10m to market cap in the past 7 days, though investors from a year ago are still down 85%
Spero Therapeutics, Inc. (NASDAQ:SPRO) shareholders should be happy to see the share price up 18% in the last month. But that hardly compensates for the shocking decline over the last twelve months. Indeed, the share price is down a whopping 85% in the last year. Arguably, the recent bounce is to be expected after such a bad drop. The important thing is whether the company can turn it around, longer term. We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.
On a more encouraging note the company has added US$10m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.
Check out our latest analysis for Spero Therapeutics
Because Spero 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In just one year Spero Therapeutics saw its revenue fall by 49%. That looks pretty grim, at a glance. The market obviously agrees, since the share price tanked 85%. Holders should not lose the lesson: loss making companies should grow revenue. Of course, extreme share price falls can be an opportunity for those who are willing to really dig deeper to understand a high risk company like this.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Take a more thorough look at Spero Therapeutics' financial health with this free report on its balance sheet.
A Different Perspective
While the broader market lost about 15% in the twelve months, Spero Therapeutics shareholders did even worse, losing 85%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 13% 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. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that Spero Therapeutics is showing 2 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...
But note: Spero Therapeutics 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.
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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.
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