When Can We Expect A Profit From Tuya Inc. (NYSE:TUYA)?
We feel now is a pretty good time to analyse Tuya Inc.'s (NYSE:TUYA) business as it appears the company may be on the cusp of a considerable accomplishment. Tuya Inc. offers Internet of Things (IoT) cloud development platform in the People’s Republic of China and internationally. On 31 December 2023, the US$1.1b market-cap company posted a loss of US$60m for its most recent financial year. Many investors are wondering about the rate at which Tuya 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.
See our latest analysis for Tuya
According to the 5 industry analysts covering Tuya, the consensus is that breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of US$3.5m in 2026. The company is therefore projected to breakeven around 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 86% year-on-year, on average, 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 Tuya given that this is a high-level summary, but, bear in mind that typically 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. Tuya currently has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which typically has high 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 Tuya 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 Tuya, take a look at Tuya's company page on Simply Wall St. We've also compiled a list of essential factors you should further research:
Valuation: What is Tuya 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 Tuya 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 Tuya’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.
