4D Molecular Therapeutics (NASDAQ:FDMT) investors are sitting on a loss of 58% if they invested a year ago

4D Molecular Therapeutics, Inc. (NASDAQ:FDMT) shareholders should be happy to see the share price up 14% in the last month. But that doesn't change the fact that the returns over the last year have been disappointing. During that time the share price has sank like a stone, descending 58%. It's not that amazing to see a bounce after a drop like that. It may be that the fall was an overreaction.

Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.

View our latest analysis for 4D Molecular Therapeutics

Because 4D Molecular Therapeutics made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last year 4D Molecular Therapeutics saw its revenue grow by 33%. We think that is pretty nice growth. Unfortunately it seems investors wanted more, because the share price is down 58% in that time. It is of course possible that the business will still deliver strong growth, it will just take longer than expected to do it. For us it's important to consider when you think a company will become profitable, if you're basing your valuation on revenue.

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

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. You can see what analysts are predicting for 4D Molecular Therapeutics in this interactive graph of future profit estimates.

A Different Perspective

Given that the market gained 11% in the last year, 4D Molecular Therapeutics shareholders might be miffed that they lost 58%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. The share price decline has continued throughout the most recent three months, down 23%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 4 warning signs for 4D Molecular Therapeutics (1 doesn't sit too well with us!) that you should be aware of before investing here.

Of course 4D Molecular Therapeutics may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

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

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.