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Market Sentiment Around Loss-Making Gaia, Inc. (NASDAQ:GAIA)

Simply Wall St

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Gaia, Inc.'s (NASDAQ:GAIA): Gaia, Inc. operates a digital video subscription service and online community that caters underserved subscriber base worldwide. The US$173m market-cap company announced a latest loss of -US$33.8m on 31 December 2018 for its most recent financial year result. As path to profitability is the topic on GAIA’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for GAIA, its year of breakeven and its implied growth rate.

See our latest analysis for Gaia

GAIA is bordering on breakeven, according to the 4 Online Retail analysts. They expect the company to post a final loss in 2020, before turning a profit of US$8.9m in 2021. Therefore, GAIA is expected to breakeven roughly 2 years from today. What rate will GAIA 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 89%, which is rather optimistic! If this rate turns out to be too aggressive, GAIA may become profitable much later than analysts predict.

NasdaqGM:GAIA Past and Future Earnings, April 8th 2019

Underlying developments driving GAIA’s growth isn’t the focus of this broad overview, however, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before I wrap up, there’s one aspect worth mentioning. GAIA has managed its capital prudently, with debt making up 15% of equity. This means that GAIA has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of GAIA which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at GAIA, take a look at GAIA’s company page on Simply Wall St. I’ve also compiled a list of important aspects you should further examine:

  1. Historical Track Record: What has GAIA's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Gaia’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.