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It's nice to see the indie Semiconductor, Inc. (NASDAQ:INDI) share price up 30% in a week. But that doesn't change the fact that the returns over the last half decade have been stomach churning. Indeed, the share price is down a whopping 79% in that time. It's true that the recent bounce could signal the company is turning over a new leaf, but we are not so sure. The fundamental business performance will ultimately determine if the turnaround can be sustained.
While the stock has risen 30% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.
Because indie Semiconductor 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. 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.
Over five years, indie Semiconductor grew its revenue at 48% per year. That's well above most other pre-profit companies. So it's not at all clear to us why the share price sunk 12% throughout that time. It could be that the stock was over-hyped before. We'd recommend carefully checking for indications of future growth - and balance sheet threats - before considering a purchase.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
This free interactive report on indie Semiconductor's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
indie Semiconductor shareholders are down 67% for the year, but the market itself is up 5.1%. 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 12% 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. 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. For example, we've discovered 1 warning sign for indie Semiconductor that you should be aware of before investing here.