We can readily understand why investors are attracted to unprofitable companies. For example, biotech and mining exploration companies often lose money for years before finding success with a new treatment or mineral discovery. But the harsh reality is that very many loss making companies burn through all their cash and go bankrupt.
So, the natural question for $Jumia Technologies(JMIA.US)$ shareholders is whether they should be concerned by its rate of cash burn. In this report, we will consider the company's annual negative free cash flow, henceforth referring to it as the 'cash burn'. We'll start by comparing its cash burn with its cash reserves in order to calculate its cash runway.
View our latest analysis for Jumia Technologies
When Might Jumia Technologies Run Out Of Money?
A cash runway is defined as the length of time it would take a company to run out of money if it kept spending at its current rate of cash burn. In December 2021, Jumia Technologies had US$513m in cash, and was debt-free. Importantly, its cash burn was US$178m over the trailing twelve months. Therefore, from December 2021 it had 2.9 years of cash runway. Notably, analysts forecast that Jumia Technologies will break even (at a free cash flow level) in about 4 years. Essentially, that means the company will either reduce its cash burn, or else require more cash. The image below shows how its cash balance has been changing over the last few years.
NYSE:JMIA Debt to Equity History May 10th 2022
How Well Is Jumia Technologies Growing?
Jumia Technologies actually ramped up its cash burn by a whopping 55% in the last year, which shows it is boosting investment in the business. That does give us pause, and we can't take much solace in the operating revenue growth of 12% in the same time frame. Considering both these factors, we're not particularly excited by its growth profile. While the past is always worth studying, it is the future that matters most of all. So you might want to take a peek at how much the company is expected to grow in the next few years.
How Hard Would It Be For Jumia Technologies To Raise More Cash For Growth?
Even though it seems like Jumia Technologies is developing its business nicely, we still like to consider how easily it could raise more money to accelerate growth. Issuing new shares, or taking on debt, are the most common ways for a listed company to raise more money for its business. One of the main advantages held by publicly listed companies is that they can sell shares to investors to raise cash and fund growth. By looking at a company's cash burn relative to its market capitalisation, we gain insight on how much shareholders would be diluted if the company needed to raise enough cash to cover another year's cash burn.
Jumia Technologies' cash burn of US$178m is about 32% of its US$552m market capitalisation. That's not insignificant, and if the company had to sell enough shares to fund another year's growth at the current share price, you'd likely witness fairly costly dilution.
Is Jumia Technologies' Cash Burn A Worry?
Even though its increasing cash burn makes us a little nervous, we are compelled to mention that we thought Jumia Technologies' cash runway was relatively promising. One real positive is that analysts are forecasting that the company will reach breakeven. While we're the kind of investors who are always a bit concerned about the risks involved with cash burning companies, the metrics we have discussed in this article leave us relatively comfortable about Jumia Technologies' situation. An in-depth examination of risks revealed 2 warning signs for Jumia Technologies that readers should think about before committing capital to this stock.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies, and this list of stocks growth stocks (according to analyst forecasts)
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
我们很容易理解为什么投资者会被不盈利的公司所吸引。例如,生物技术和采矿勘探公司经常亏损多年,然后才在新的治疗方法或矿物发现方面取得成功。但残酷的现实是,许多亏损的公司烧光了所有的现金,破产了。
所以,自然的问题是$Jumia Technologies(JMIA.US)$的股东担心的是,他们是否应该担心它的现金消耗率。在这份报告中,我们将考虑该公司的年度自由现金流为负,此后将其称为“现金消耗”。我们将首先将其现金消耗与其现金储备进行比较,以计算其现金跑道。
查看我们对Jumia Technologies的最新分析
Jumia Technologies什么时候会耗尽资金?
现金跑道的定义是,如果一家公司继续以目前的现金消耗速度支出,它需要多长时间才能耗尽资金。2021年12月,Jumia Technologies拥有5.13亿美元现金,而且没有债务。重要的是,在接下来的12个月里,它的现金消耗为1.78亿美元。因此,从2021年12月开始,它有2.9年的现金跑道。值得注意的是,分析师预测Jumia Technologies将在大约4年内实现盈亏平衡(在自由现金流水平上)。从本质上说,这意味着该公司要么减少现金消耗,要么需要更多现金。下图显示了其现金余额在过去几年中的变化情况。
纽约证券交易所:JMIA债转股历史2022年5月10日
久米亚科技的增长情况如何?
Jumia Technologies去年的现金消耗实际上增加了55%,这表明它正在增加对业务的投资。这确实让我们犹豫不决,我们也不能从同期12%的运营收入增长中获得太多安慰。考虑到这两个因素,我们对其增长情况并不是特别兴奋。虽然过去总是值得研究的,但最重要的是未来。因此,你可能想看看该公司在未来几年的预期增长速度。
Jumia Technologies筹集更多现金以实现增长的难度有多大?
尽管Jumia Technologies似乎发展得很好,但我们仍然愿意考虑它筹集更多资金以加速增长的容易程度。发行新股或承担债务是上市公司为其业务筹集更多资金的最常见方式。公开上市公司的主要优势之一是,它们可以向投资者出售股票,以筹集现金和为增长提供资金。通过观察一家公司相对于其市值的现金消耗,我们可以洞察到,如果公司需要筹集足够的现金来支付另一年的现金消耗,股东将被稀释多少。
Jumia Technologies 1.78亿美元的现金消耗约占其5.52亿美元市值的32%。这并不是无关紧要的,如果该公司不得不出售足够的股票,以在当前股价下为下一年的增长提供资金,你很可能会看到代价相当高昂的稀释。
Jumia Technologies的烧钱令人担忧吗?
尽管Jumia不断增加的现金消耗让我们有点紧张,但我们不得不提到,我们认为Jumia Technologies的现金跑道相对来说是有希望的。一个真正的积极因素是,分析师们预测,该公司将实现盈亏平衡。虽然我们是那种总是有点担心烧钱公司所涉及的风险的投资者,但我们在本文中讨论的指标让我们对Jumia Technologies的情况相对放心。对暴露出的风险进行深入检查Jumia Technologies的2个警告信号读者在向这只股票注资之前应该考虑一下。
当然了,如果你把目光投向别处,你可能会发现这是一笔很棒的投资。所以让我们来看看这个免费感兴趣的公司名单,以及这份名单中的成长股(根据分析师预测)
对这篇文章有什么反馈吗?担心内容吗? 保持联系直接与我们联系。或者,也可以给编辑组发电子邮件,地址是implywallst.com。
本文由Simply Wall St.撰写,具有概括性。我们仅使用不偏不倚的方法提供基于历史数据和分析师预测的评论,我们的文章并不打算作为财务建议。它不构成买卖任何股票的建议,也没有考虑你的目标或你的财务状况。我们的目标是为您带来由基本面数据驱动的长期重点分析。请注意,我们的分析可能不会将最新的对价格敏感的公司公告或定性材料考虑在内。Simply Wall St.对上述任何一只股票都没有持仓。