Announcing: Adaptimmune Therapeutics (NASDAQ:ADAP) Stock Soared An Exciting 367% In The Last Year

It might be of some concern to shareholders to see the Adaptimmune Therapeutics plc (NASDAQ:ADAP) share price down 14% in the last month. But that cannot eclipse the spectacular share price rise we've seen over the last twelve months. In fact, it is up 367% in that time. So the recent fall isn't enough to negate the good performance. The real question is whether the fundamental business performance can justify the strong increase over the long term.

View our latest analysis for Adaptimmune Therapeutics

We don't think Adaptimmune Therapeutics' revenue of US$2,228,000 is enough to establish significant demand. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. It seems likely some shareholders believe that Adaptimmune Therapeutics has the funding to invent a new product before too long.

We think companies that have neither significant revenues nor profits are pretty high risk. There is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets to raise equity. So the share price itself impacts the value of the shares (as it determines the cost of capital). While some such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Of course, if you time it right, high risk investments like this can really pay off, as Adaptimmune Therapeutics investors might know.

Adaptimmune Therapeutics has plenty of cash in the bank, with cash in excess of all liabilities sitting at US$314m, when it last reported (June 2020). That allows management to focus on growing the business, and not worry too much about raising capital. And with the share price up 52% in the last year , the market is focussed on that blue sky potential. You can see in the image below, how Adaptimmune Therapeutics' cash levels have changed over time (click to see the values).

Of course, the truth is that it is hard to value companies without much revenue or profit. However you can take a look at whether insiders have been buying up shares. It's usually a positive if they have, as it may indicate they see value in the stock. You can click here to see if there are insiders buying.

A Different Perspective

It's nice to see that Adaptimmune Therapeutics shareholders have received a total shareholder return of 367% over the last year. There's no doubt those recent returns are much better than the TSR loss of 8.2% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. 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. For example, we've discovered 6 warning signs for Adaptimmune Therapeutics (1 is a bit concerning!) that you should be aware of before investing here.

We will like Adaptimmune Therapeutics better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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

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. 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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