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Did You Manage To Avoid Botanix Pharmaceuticals' (ASX:BOT) Painful 58% Share Price Drop?

Taking the occasional loss comes part and parcel with investing on the stock market. And there's no doubt that Botanix Pharmaceuticals Limited (ASX:BOT) stock has had a really bad year. The share price is down a hefty 58% in that time. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 19% in three years. Shareholders have had an even rougher run lately, with the share price down 52% in the last 90 days. Of course, this share price action may well have been influenced by the 22% decline in the broader market, throughout the period.

Check out our latest analysis for Botanix Pharmaceuticals

Botanix Pharmaceuticals wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually expect strong 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.

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Botanix Pharmaceuticals grew its revenue by 62% over the last year. That's well above most other pre-profit companies. In contrast the share price is down 58% over twelve months. Yes, the market can be a fickle mistress. 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.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

ASX:BOT Income Statement May 12th 2020
ASX:BOT Income Statement May 12th 2020

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

Botanix Pharmaceuticals shareholders are down 58% for the year, falling short of the market return. Meanwhile, the broader market slid about 9.6%, likely weighing on the stock. The three-year loss of 6.9% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. It's always interesting to track share price performance over the longer term. But to understand Botanix Pharmaceuticals better, we need to consider many other factors. For example, we've discovered 4 warning signs for Botanix Pharmaceuticals that you should be aware of before investing here.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.