Redbubble Limited’s (ASX:RBL): Redbubble Limited operates as an online marketplace that facilitates the sale and purchase of art and designs on a range of products between independent creatives and consumers. On 30 June 2018, the AU$223m market-cap posted a loss of -AU$10.1m for its most recent financial year. The most pressing concern for investors is RBL’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for RBL.
Consensus from the 3 Online Retail analysts is RBL is on the verge of breakeven. They expect the company to post a final loss in 2019, before turning a profit of AU$4.6m in 2020. RBL is therefore projected to breakeven around 2 years from now. In order to meet this breakeven date, I calculated the rate at which RBL must grow year-on-year. It turns out an average annual growth rate of 76% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, RBL may become profitable much later than analysts predict.
Underlying developments driving RBL’s growth isn’t the focus of this broad overview, however, keep in mind that by and large 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. RBL currently has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which usually has a high level of debt relative to its equity. This means that RBL 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.
There are too many aspects of RBL to cover in one brief article, but the key fundamentals for the company can all be found in one place – RBL’s company page on Simply Wall St. I’ve also put together a list of important factors you should further examine:
- Valuation: What is RBL 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 RBL 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 Redbubble’s board and the CEO’s back ground.
- 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 past 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. For errors that warrant correction please contact the editor at firstname.lastname@example.org.