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Owlet, Inc.'s (NYSE:OWLT) Path To Profitability

·3 min read

Owlet, Inc. (NYSE:OWLT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Owlet, Inc. operates as a digital parenting platform in the United States. With the latest financial year loss of US$72m and a trailing-twelve-month loss of US$99m, the US$199m market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on Owlet's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Owlet

According to the 2 industry analysts covering Owlet, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of US$11m in 2024. 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 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 70% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

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

Given this is a high-level overview, we won’t go into details of Owlet's upcoming projects, however, take into account that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Owlet currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Owlet's case is 72%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Owlet, so if you are interested in understanding the company at a deeper level, take a look at Owlet's company page on Simply Wall St. We've also compiled a list of pertinent factors you should further examine:

  1. Valuation: What is Owlet 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 Owlet 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 Owlet’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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