Shareholders in Adicet Bio (NASDAQ:ACET) have lost 49%, as stock drops 22% this past week

Investors can approximate the average market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Investors in Adicet Bio, Inc. (NASDAQ:ACET) have tasted that bitter downside in the last year, as the share price dropped 49%. That's well below the market decline of 21%. Adicet Bio may have better days ahead, of course; we've only looked at a one year period. Unfortunately the last month hasn't been any better, with the share price down 52%.

If the past week is anything to go by, investor sentiment for Adicet Bio isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

See our latest analysis for Adicet Bio

Adicet Bio 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last twelve months, Adicet Bio increased its revenue by 215%. That's a strong result which is better than most other loss making companies. Given the revenue growth, the share price drop of 49% seems quite harsh. Our sympathies to shareholders who are now underwater. Prima facie, revenue growth like that should be a good thing, so it's worth checking whether losses have stabilized. Our monkey brains haven't evolved to think exponentially, so humans do tend to underestimate companies that have exponential growth.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

Adicet Bio is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. If you are thinking of buying or selling Adicet Bio stock, you should check out this free report showing analyst consensus estimates for future profits.

A Different Perspective

Adicet Bio shareholders are down 49% for the year, even worse than the market loss of 21%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. With the stock down 41% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. 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. Case in point: We've spotted 3 warning signs for Adicet Bio you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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

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