Frontier Digital Ventures Limited (ASX:FDV): When Will It Breakeven?

Frontier Digital Ventures Limited (ASX:FDV) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Frontier Digital Ventures Limited is a private equity firm specializing in investing and developing online classifieds business in emerging markets. On 31 December 2020, the AU$480m market-cap company posted a loss of AU$13m for its most recent financial year. The most pressing concern for investors is Frontier Digital Ventures' path to profitability – when will it 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 Frontier Digital Ventures

According to the 2 industry analysts covering Frontier Digital Ventures, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of AU$6.5m in 2023. The company is therefore projected to breakeven around 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 91% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Frontier Digital Ventures given that this is a high-level summary, but, bear in mind that generally 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 0.4% 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:

There are key fundamentals of Frontier Digital Ventures which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Frontier Digital Ventures, take a look at Frontier Digital Ventures' company page on Simply Wall St. We've also compiled a list of relevant aspects you should further examine:

1. Valuation: What is Frontier Digital Ventures 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 Frontier Digital Ventures 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 Frontier Digital Ventures’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.

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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. 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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