It is doubtless a positive to see that the Butterfly Network, Inc. (NYSE:BFLY) share price has gained some 50% in the last three months. But that's not enough to compensate for the decline over the last twelve months. During that time the share price has sank like a stone, descending 58%. Some might say the recent bounce is to be expected after such a bad drop. Arguably, the fall was overdone.

Since Butterfly Network has shed US$170m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Butterfly Network

Because Butterfly Network 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. 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 year Butterfly Network saw its revenue grow by 25%. That's definitely a respectable growth rate. 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 graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

If you are thinking of buying or selling Butterfly Network stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Butterfly Network shareholders are down 58% for the year, even worse than the market loss of 22%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. It's great to see a nice little 50% rebound in the last three months. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). 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 5 warning signs for Butterfly Network you should be aware of, and 2 of them don't sit too well with us.

But note: Butterfly Network may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.