We feel now is a pretty good time to analyse Dada Nexus Limited's (NASDAQ:DADA) business as it appears the company may be on the cusp of a considerable accomplishment. Dada Nexus Limited operates a platform of local on-demand retail and delivery in the People's Republic of China. The US$825m market-cap company posted a loss in its most recent financial year of CN¥2.0b and a latest trailing-twelve-month loss of CN¥1.0b shrinking the gap between loss and breakeven. The most pressing concern for investors is Dada Nexus' path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Check out our latest analysis for Dada Nexus
According to the 16 industry analysts covering Dada Nexus, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of CN¥202m in 2024. So, the company is predicted to breakeven approximately a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 62% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
NasdaqGS:DADA Earnings Per Share Growth January 9th 2024
Underlying developments driving Dada Nexus' growth isn't the focus of this broad overview, though, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there's one aspect worth mentioning. Dada Nexus currently has no debt on its balance sheet, which is rare for a loss-making growth company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of Dada Nexus to cover in one brief article, but the key fundamentals for the company can all be found in one place – Dada Nexus' company page on Simply Wall St. We've also put together a list of pertinent aspects you should look at:
Valuation: What is Dada Nexus worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Dada Nexus is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Dada Nexus's board and the CEO's background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.