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Market Sentiment Around Loss-Making Bitauto Holdings Limited (NYSE:BITA)

Gavin Beck

Bitauto Holdings Limited’s (NYSE:BITA): Bitauto Holdings Limited, through its subsidiaries, provides Internet content and marketing services, and transaction services for the automobile industry in the People’s Republic of China. The US$1.83B market-cap company announced a latest loss of -CN¥1.61B on 31 December 2017 for its most recent financial year result. The most pressing concern for investors is BITA’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for BITA, its year of breakeven and its implied growth rate.

See our latest analysis for Bitauto Holdings

According to the industry analysts covering BITA, breakeven is near. They anticipate the company to incur a final loss in 2018, before generating positive profits of CN¥282.07M in 2019. So, BITA is predicted to breakeven approximately a few months from now. How fast will BITA have to grow each year in order to reach the breakeven point by 2019? Working backwards from analyst estimates, it turns out that they expect the company to grow 106.12% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, BITA may become profitable much later than analysts predict.

NYSE:BITA Past Future Earnings Jun 13th 18

Given this is a high-level overview, I won’t go into detail the detail of BITA’s upcoming projects, though, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing I would like to bring into light with BITA is its debt-to-equity ratio of 127.50%. Typically, debt shouldn’t exceed 40% of your equity, which in BITA’s case, it has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on BITA, so if you are interested in understanding the company at a deeper level, take a look at BITA’s company page on Simply Wall St. I’ve also put together a list of relevant factors you should look at:

  1. Valuation: What is BITA 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 BITA 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 Bitauto Holdings’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.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.