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The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on a lighter note, a good company can see its share price rise well over 100%. Long term Crinetics Pharmaceuticals, Inc. (NASDAQ:CRNX) shareholders would be well aware of this, since the stock is up 200% in five years. In more good news, the share price has risen 11% in thirty days.
Since the long term performance has been good but there's been a recent pullback of 5.6%, let's check if the fundamentals match the share price.
View our latest analysis for Crinetics Pharmaceuticals
With just US$1,385,000 worth of revenue in twelve months, we don't think the market considers Crinetics Pharmaceuticals to have proven its business plan. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). For example, they may be hoping that Crinetics Pharmaceuticals 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. You should be aware that the company needed to issue more shares recently so that it could raise enough money to continue pursuing its business plan. While some companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. Of course, if you time it right, high risk investments like this can really pay off, as Crinetics Pharmaceuticals investors might know.
Crinetics Pharmaceuticals had plenty of cash in the bank when it last reported. That allows management to focus on growing the business, and not feel like the recent capital raising was a matter of urgency. And with the share price up 73% per year, over 5 years , the market is focussed on that blue sky potential. You can click on the image below to see (in greater detail) how Crinetics Pharmaceuticals' 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. Given that situation, many of the best investors like to check if insiders have been buying shares. If they are buying a significant amount of shares, that's certainly a good thing. You can click here to see if there are insiders buying.
A Different Perspective
It's nice to see that Crinetics Pharmaceuticals shareholders have received a total shareholder return of 92% over the last year. That gain is better than the annual TSR over five years, which is 25%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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. To that end, you should be aware of the 3 warning signs we've spotted with Crinetics Pharmaceuticals .