Loss-Making Marley Spoon AG (ASX:MMM) Expected To Breakeven In The Medium-Term

We feel now is a pretty good time to analyse Marley Spoon AG's (ASX:MMM) business as it appears the company may be on the cusp of a considerable accomplishment. Marley Spoon AG provides subscription-based weekly meal kit services in Australia, the United States, Austria, Belgium, Denmark, Sweden, Germany, and the Netherlands. The company’s loss has recently broadened since it announced a €35m loss in the full financial year, compared to the latest trailing-twelve-month loss of €80m, moving it further away from breakeven. As path to profitability is the topic on Marley Spoon'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.

See our latest analysis for Marley Spoon

Expectations from some of the Australian Online Retail analysts is that Marley Spoon is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of €1.9m in 2021. Therefore, the company is expected to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 118% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Marley Spoon given that this is a high-level summary, however, 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 issue worth mentioning. Marley Spoon currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. Oftentimes, losses exist only on paper but other times, it can be a red flag.

Next Steps:

There are too many aspects of Marley Spoon to cover in one brief article, but the key fundamentals for the company can all be found in one place – Marley Spoon's company page on Simply Wall St. We've also put together a list of essential aspects you should look at:

1. Valuation: What is Marley Spoon 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 Marley Spoon 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 Marley Spoon’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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