Janux Therapeutics, Inc. (NASDAQ:JANX) shareholders should be happy to see the share price up 13% in the last month. But that's not enough to compensate for the decline over the last twelve months. During that time the share price has sank like a stone, descending 54%. Some might say the recent bounce is to be expected after such a bad drop. You could argue that the sell-off was too severe.
Since Janux Therapeutics has shed US$50m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.
Because Janux 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last twelve months, Janux Therapeutics increased its revenue by 1,175%. That's a strong result which is better than most other loss making companies. Meanwhile, the share price slid 54%. This could mean hype has come out of the stock because the bottom line is concerning investors. We'd definitely consider it a positive if the company is trending towards profitability. If you can see that happening, then perhaps consider adding this stock to your watchlist.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Take a more thorough look at Janux Therapeutics' financial health with this free report on its balance sheet.
A Different Perspective
Janux Therapeutics shareholders are down 54% for the year, even worse than the market loss of 20%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. The share price decline has continued throughout the most recent three months, down 25%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Janux Therapeutics (at least 1 which is a bit unpleasant) , and understanding them should be part of your investment process.
But note: Janux 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.