Investing in stocks inevitably means buying into some companies that perform poorly. But long term indie Semiconductor, Inc. (NASDAQ:INDI) shareholders have had a particularly rough ride in the last three year. Sadly for them, the share price is down 62% in that time. And more recent buyers are having a tough time too, with a drop of 43% in the last year. The last week also saw the share price slip down another 8.4%.
Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.
Given that indie Semiconductor didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last three years, indie Semiconductor saw its revenue grow by 54% per year, compound. That is faster than most pre-profit companies. In contrast, the share price is down 17% compound, over three years - disappointing by most standards. This could mean hype has come out of the stock because the losses are concerning investors. When we see revenue growth, paired with a falling share price, we can't help wonder if there is an opportunity for those who are willing to dig deeper.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
Take a more thorough look at indie Semiconductor's financial health with this free report on its balance sheet.
A Different Perspective
Investors in indie Semiconductor had a tough year, with a total loss of 43%, against a market gain of about 26%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 10% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. 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. Take risks, for example - indie Semiconductor has 4 warning signs (and 1 which is significant) we think you should know about.
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.
