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BlueCity Holdings Limited's (NASDAQ:BLCT) Has Found A Path To Profitability

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Simply Wall St
·3 min read
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BlueCity Holdings Limited (NASDAQ:BLCT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. BlueCity Holdings Limited operates a platform for LGBTQ community primarily under BlueCity brand in China, India, Korea, Thailand, and Vietnam. The US$424m market-cap company’s loss lessened since it announced a CN¥684m loss in the full financial year, compared to the latest trailing-twelve-month loss of CN¥195m, as it approaches breakeven. Many investors are wondering about the rate at which BlueCity Holdings will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for BlueCity Holdings

According to the 3 industry analysts covering BlueCity Holdings, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of CN¥47m in 2021. 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 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 68% 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.

earnings-per-share-growth
earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of BlueCity Holdings' upcoming projects, however, take into account that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. BlueCity Holdings 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 key fundamentals of BlueCity Holdings 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 BlueCity Holdings, take a look at BlueCity Holdings' company page on Simply Wall St. We've also compiled a list of relevant factors you should further research:

  1. Valuation: What is BlueCity Holdings 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 BlueCity Holdings is currently mispriced by the market.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on BlueCity Holdings’s board and the CEO’s background.

  3. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.