It's nice to see the indie Semiconductor, Inc. (NASDAQ:INDI) share price up 15% in a week. Meanwhile over the last three years the stock has dropped hard. Regrettably, the share price slid 66% in that period. So the improvement may be a real relief to some. The rise has some hopeful, but turnarounds are often precarious.

On a more encouraging note the company has added US$97m to its market cap in just the last 7 days, so let's see if we can determine what's driven the three-year loss for shareholders.

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. When a company doesn't make profits, we'd generally hope to see good 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.

Over three years, indie Semiconductor grew revenue at 61% per year. That is faster than most pre-profit companies. The share price has moved in quite the opposite direction, down 18% over that time, a bad result. It seems likely that the market is worried about the continual losses. But a share price drop of that magnitude could well signal that the market is overly negative on the stock.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

indie Semiconductor shareholders are down 34% for the year, but the market itself is up 35%. 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 10% over the last half decade. 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. Even so, be aware that indie Semiconductor is showing 3 warning signs in our investment analysis , you should know about...

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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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