Breakeven Is Near for Dada Nexus Limited (NASDAQ:DADA)
Dada Nexus Limited (NASDAQ:DADA) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Dada Nexus Limited operates a platform of local on-demand retail and delivery in the People’s Republic of China. The US$550m market-cap company’s loss lessened since it announced a CN¥2.0b loss in the full financial year, compared to the latest trailing-twelve-month loss of CN¥1.0b, as it approaches breakeven. Many investors are wondering about the rate at which Dada Nexus will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
View our latest analysis for Dada Nexus
According to the 14 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¥235m in 2024. The company is therefore projected to breakeven around 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 67% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for Dada Nexus given that this is a high-level summary, though, keep in mind that generally 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 typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
Next Steps:
This article is not intended to be a comprehensive analysis on Dada Nexus, so if you are interested in understanding the company at a deeper level, take a look at Dada Nexus' company page on Simply Wall St. We've also compiled a list of important factors you should further research:
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.
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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.
