If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But long term AnaptysBio, Inc. (NASDAQ:ANAB) shareholders have had a particularly rough ride in the last three year. Regrettably, they have had to cope with a 60% drop in the share price over that period. The more recent news is of little comfort, with the share price down 30% in a year. Shareholders have had an even rougher run lately, with the share price down 58% in the last 90 days.

After losing 13% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

Because AnaptysBio 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. Shareholders of unprofitable companies usually desire strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

In the last three years AnaptysBio saw its revenue shrink by 43% per year. That's definitely a weaker result than most pre-profit companies report. Arguably, the market has responded appropriately to this business performance by sending the share price down 17% (annualized) in the same time period. Bagholders or 'baggies' are people who buy more of a stock as the price collapses. They are then left 'holding the bag' if the shares turn out to be worthless. After losing money on a declining business with falling stock price, we always consider whether eager bagholders are still offering us a reasonable exit price.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

AnaptysBio is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for AnaptysBio in this interactive graph of future profit estimates.

A Different Perspective

Investors in AnaptysBio had a tough year, with a total loss of 30%, against a market gain of about 25%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 1.7% 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. For instance, we've identified 4 warning signs for AnaptysBio (1 is a bit unpleasant) that you should be aware of.

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are 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.