The AudioEye, Inc. (NASDAQ:AEYE) share price is down a rather concerning 34% in the last month. But over the last year the share price has taken off like one of Elon Musk's rockets. In fact, it is up 311% 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.

Although AudioEye has shed US$42m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

Check out our latest analysis for AudioEye

Given that AudioEye 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 desire 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.

AudioEye grew its revenue by 6.9% last year. That's not a very high growth rate considering it doesn't make profits. So it's truly surprising that the share price rocketed 311% in a single year. It's great to see that some have made big profits, but we aren't so sure that the increase is justified. This is an example of the huge profits some lucky shareholders occasionally make on growth stocks.

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

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. You can see what analysts are predicting for AudioEye in this interactive graph of future profit estimates.

A Different Perspective

It's good to see that AudioEye has rewarded shareholders with a total shareholder return of 311% in the last twelve months. That gain is better than the annual TSR over five years, which is 27%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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 for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with AudioEye , and understanding them should be part of your investment process.

AudioEye is not the only stock insiders are buying. So take a peek at this free list of small cap companies at attractive valuations which insiders have been 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.