Those Who Purchased Albireo Pharma (NASDAQ:ALBO) Shares A Year Ago Have A 11% Loss To Show For It
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Albireo Pharma, Inc. (NASDAQ:ALBO) shareholders should be happy to see the share price up 13% in the last quarter. But in truth the last year hasn't been good for the share price. After all, the share price is down 11% in the last year, significantly under-performing the market.
See our latest analysis for Albireo Pharma
With just US$2,108,000 worth of revenue in twelve months, we don't think the market considers Albireo Pharma to have proven its business plan. We can't help wondering why it's publicly listed so early in its journey. Are venture capitalists not interested? So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. For example, they may be hoping that Albireo Pharma comes up with a great new product, before it runs out of money.
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 such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt.
When it last reported its balance sheet in March 2019, Albireo Pharma had cash in excess of all liabilities of US$89m. While that's nothing to panic about, there is some possibility the company will raise more capital, especially if profits are not imminent. We'd venture that shareholders are concerned about the need for more capital, because the share price has dropped 11% in the last year. You can click on the image below to see (in greater detail) how Albireo Pharma's cash levels have changed over time.
In reality it's hard to have much certainty when valuing a business that has neither revenue or profit. What if insiders are ditching the stock hand over fist? It would bother me, that's for sure. You can click here to see if there are insiders selling.
A Different Perspective
While Albireo Pharma shareholders are down 11% for the year, the market itself is up 5.0%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. Putting aside the last twelve months, it's good to see the share price has rebounded by 13%, in the last ninety days. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). You could get a better understanding of Albireo Pharma's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Of course Albireo Pharma may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.
