Investing in stocks comes with the risk that the share price will fall. And unfortunately for Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) shareholders, the stock is a lot lower today than it was a year ago. The share price has slid 55% in that time. To make matters worse, the returns over three years have also been really disappointing (the share price is 38% lower than three years ago). The falls have accelerated recently, with the share price down 25% in the last three months.

On a more encouraging note the company has added US$422m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.

Apellis Pharmaceuticals isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally hope to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last twelve months, Apellis Pharmaceuticals increased its revenue by 395%. That's a strong result which is better than most other loss making companies. Meanwhile, the share price slid 55%. Typically a growth stock like this will be volatile, with some shareholders concerned about the red ink on the bottom line (that is, the losses). 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).

Apellis Pharmaceuticals is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So it makes a lot of sense to check out what analysts think Apellis Pharmaceuticals will earn in the future (free analyst consensus estimates)

A Different Perspective

Apellis Pharmaceuticals shareholders are down 55% for the year, but the market itself is up 24%. 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. Longer term investors wouldn't be so upset, since they would have made 7%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Apellis Pharmaceuticals better, we need to consider many other factors. For instance, we've identified 2 warning signs for Apellis Pharmaceuticals that you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com