It has been just over two years since Bluebird Bio (BLUE 1.13%) split into two separate companies. One focused on gene therapies and retained the Bluebird name; another focused on oncology, and now goes under the name 2seventy Bio. Below, I'll look at what your returns would look like if you invested $10,000 in Bluebird Bio after the split.

What the stock was worth after the separation

On Nov. 5, 2021, after the split was complete, shares of Bluebird were trading at around $13. If you'd invested $10,000 into the business at that point and bought at that price, you'd own 769 shares. The timing of the purchase, however, would have been unfortunate: it would have taken place as growth stocks as a whole were starting to come down in value.

Shares of Bluebird have been volatile of late, but they currently trade at around $2.50. That would put the value of those 769 shares at less than $2,000, for a decline of over 80%. To say it hasn't been a good investment would be a vast understatement. While the S&P 500 hasn't exactly been a great investment over that period, it's at least in positive territory -- up around 2%.

Could the stock fall even further?

The problem with Bluebird's stock today is that it continues to fall. Investors are eager to unload the stock even though the company recently obtained approval from the Food and Drug Administration (FDA) for its gene therapy Lyfgenia as a treatment for sickle cell disease.

While FDA approval is normally good news for a business, it's not having a positive impact on Bluebird's stock. A key issue is that despite the approval, the FDA has slapped a warning on the label that Lyfgenia can increase the risk of blood cancer. It's particularly worrisome given that a rival treatment from CRISPR Therapeutics and Vertex Pharmaceuticals, Casgevy, which also obtained approval for the same indication, didn't come with such a warning. On top of all that, Casgevy is also priced lower, at $2.2 million versus Lyfgenia's steeper $3.1 million price tag.

Overall, that paints a worrisome picture for Bluebird, because it could drastically impact the demand for the treatment. And since a company such as Bluebird desperately needs a strong source of revenue, these developments have drastically increased the risk for the healthcare stock.

Bluebird's financials aren't in great shape

In the trailing 12 months, Bluebird has incurred operating losses totaling $138 million. During that time, it's also burned through $293 million in cash just from its day-to-day operating activities. That's particularly concerning given that as of the end of September, the company reported cash and marketable securities totaling just over $174 million, along with restricted cash of $51 million.

Bluebird doesn't have much cash to spare. If it can't rely on strong demand for Lyfgenia, it might need to rely heavily on issuing debt or stock to help fund its cash balance. And on Monday, the company already proposed a $150 million stock offering. Offerings have a dilutive effect on shareholders, and put downward pressure on the stock price. Investors should expect more of them in the future if Bluebird's financials don't drastically improve.

The stock is too risky to buy today

The big hope for investors was that the company's gene therapy would be a game changer for Bluebird Bio, but that hope appears to be all but gone right now. And with a challenging path forward, you shouldn't expect a turnaround in the stock's fortunes anytime soon. Unless you're a contrarian investor with an extremely high risk tolerance, you'll want to avoid this stock.