Investing in stocks inevitably means buying into some companies that perform poorly. But long term Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH) shareholders have had a particularly rough ride in the last three year. Regrettably, they have had to cope with a 61% drop in the share price over that period. The more recent news is of little comfort, with the share price down 38% in a year. Furthermore, it's down 39% in about a quarter. That's not much fun for holders. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.

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

Given that Aurinia Pharmaceuticals didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. 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.

In the last three years, Aurinia Pharmaceuticals saw its revenue grow by 46% per year, compound. That is faster than most pre-profit companies. The share price has moved in quite the opposite direction, down 17% over that time, a bad result. This could mean hype has come out of the stock because the losses are concerning investors. But a share price drop of that magnitude could well signal that the market is overly negative on the stock.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

Take a more thorough look at Aurinia Pharmaceuticals' financial health with this free report on its balance sheet.

A Different Perspective

While the broader market gained around 33% in the last year, Aurinia Pharmaceuticals shareholders lost 38%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 3% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Aurinia Pharmaceuticals you should know about.

We will like Aurinia Pharmaceuticals 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 American 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.