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Loss-Making Aurora Mobile Limited (NASDAQ:JG) Expected To Breakeven In The Medium-Term

With the business potentially at an important milestone, we thought we'd take a closer look at Aurora Mobile Limited's (NASDAQ:JG) future prospects. Aurora Mobile Limited, through its subsidiaries, operates as a mobile app developer service provider in China. The US$92m market-cap company posted a loss in its most recent financial year of CN¥141m and a latest trailing-twelve-month loss of CN¥109m shrinking the gap between loss and breakeven. The most pressing concern for investors is Aurora Mobile's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Aurora Mobile

Aurora Mobile is bordering on breakeven, according to the 2 American Software analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of CN¥39m in 2024. The company is therefore projected to breakeven just over a year from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 108%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

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

We're not going to go through company-specific developments for Aurora Mobile given that this is a high-level summary, however, bear in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that Aurora Mobile 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. 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 too many aspects of Aurora Mobile to cover in one brief article, but the key fundamentals for the company can all be found in one place – Aurora Mobile's company page on Simply Wall St. We've also put together a list of pertinent aspects you should look at:

  1. Valuation: What is Aurora Mobile 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 Aurora Mobile 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 Aurora Mobile’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.

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

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.

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