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When Can We Expect A Profit From MOGU Inc. (NYSE:MOGU)?

Simply Wall St

MOGU Inc.'s (NYSE:MOGU): MOGU Inc. operates as an online fashion and lifestyle destination in China. With the latest financial year loss of -CN¥1.2b and a trailing-twelve month of -CN¥1.1b, the US$565m market-cap alleviates its loss by moving closer towards its target of breakeven. As path to profitability is the topic on MOGU’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for MOGU.

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According to the 3 industry analysts covering MOGU, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of CN¥337m in 2021. So, MOGU is predicted to breakeven approximately 2 years from today. What rate will MOGU have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 93%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

NYSE:MOGU Past and Future Earnings, May 22nd 2019

Given this is a high-level overview, I won’t go into details of MOGU’s upcoming projects, though, 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 I wrap up, there’s one aspect worth mentioning. MOGU currently has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which usually has a high level of debt relative to its equity. MOGU 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 MOGU, so if you are interested in understanding the company at a deeper level, take a look at MOGU’s company page on Simply Wall St. I’ve also put together a list of essential factors you should further examine:

  1. Valuation: What is MOGU 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 MOGU 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 MOGU’s board and the CEO’s back ground.
  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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.