2 Charts That Explain Invitae's Shortcomings
The field of genetics is the new scientific frontier. Genetic testing, in particular, could one day play a vital role in how we understand, prevent, and treat disease. Invitae (NYSE: NVTA) has been at the forefront of the industry for years.
However, investors who bought at the company's IPO in 2015 and and have held since then are down roughly 50% on their investment today. How does a biotech leader perform so poorly as an investment? Let's take a look at Invitae's struggles through two simple illustrations.
It's common for new, growing companies to lose money. Oftentimes, a young company will invest heavily in itself in order to grow revenue, or will increase the volume of goods to spread out costs. The hope is that these heightened expenses will one day pay off: When a company reaches the point where revenue grows faster than spending, the business trends toward turning a profit. This is known as "operating leverage."
Source Fool.com
