REE Automotive Ltd.'s (NASDAQ:REE) Shift From Loss To Profit
With the business potentially at an important milestone, we thought we'd take a closer look at REE Automotive Ltd.'s (NASDAQ:REE) future prospects. REE Automotive Ltd. operates as an automotive technology company in Israel, the United Kingdom, the United States, Germany, and internationally. On 31 December 2023, the US$63m market-cap company posted a loss of US$114m for its most recent financial year. Many investors are wondering about the rate at which REE Automotive will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
See our latest analysis for REE Automotive
REE Automotive is bordering on breakeven, according to the 4 American Auto Components analysts. They expect the company to post a final loss in 2025, before turning a profit of US$12m in 2026. Therefore, the company is expected to breakeven roughly 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 58% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of REE Automotive's upcoming projects, though, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 25% of equity. This means that it 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:
This article is not intended to be a comprehensive analysis on REE Automotive, so if you are interested in understanding the company at a deeper level, take a look at REE Automotive's company page on Simply Wall St. We've also compiled a list of essential factors you should further research:
Historical Track Record: What has REE Automotive'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.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on REE Automotive's board and the CEO’s background.
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.
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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.
