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With the business potentially at an important milestone, we thought we'd take a closer look at Aurora Mobile Limited's (NASDAQ:JG) future prospects. Aurora Mobile Limited, through its subsidiaries, provides mobile big data solutions platform in the People’s Republic of China. The US$496m market-cap company announced a latest loss of CN¥225m on 31 December 2020 for its most recent financial year result. As path to profitability is the topic on Aurora Mobile's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Aurora Mobile is bordering on breakeven, according to some American Software analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of CN¥9.9m in 2023. So, the company is predicted to breakeven approximately 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 67% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Aurora Mobile given that this is a high-level summary, though, take into account that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we would like to bring into light with Aurora Mobile is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Aurora Mobile's case is 70%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
There are key fundamentals of Aurora Mobile which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Aurora Mobile, take a look at Aurora Mobile's company page on Simply Wall St. We've also put together a list of important factors you should further research:
Valuation: What is Aurora Mobile 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 Aurora Mobile 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 Aurora Mobile’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.
This article by Simply Wall St is general in nature. 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.
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