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With the business potentially at an important milestone, we thought we'd take a closer look at Kingsoft Cloud Holdings Limited's (NASDAQ:KC) future prospects. Kingsoft Cloud Holdings Limited provides cloud services to businesses and organizations in China. With the latest financial year loss of CN¥982m and a trailing-twelve-month loss of CN¥1.0b, the US$7.5b market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Kingsoft Cloud Holdings' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
According to the 13 industry analysts covering Kingsoft Cloud Holdings, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of CN¥686m 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 72% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Kingsoft Cloud Holdings' growth isn’t the focus of this broad overview, however, keep in mind 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’d like to point out is that The company has managed its capital prudently, with debt making up 5.6% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on Kingsoft Cloud Holdings, so if you are interested in understanding the company at a deeper level, take a look at Kingsoft Cloud Holdings' company page on Simply Wall St. We've also put together a list of important factors you should further examine:
Historical Track Record: What has Kingsoft Cloud Holdings' performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Kingsoft Cloud Holdings' 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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