When Will Loss-Maker mybet Holding SE (FRA:A2LQ00) Need More Cash?

mybet Holding SE (DB:A2LQ00) continues its loss-making streak, announcing negative earnings for its latest financial year ending. The single most important question to ask when you’re investing in a loss-making company is – will they need to raise cash again, and if so, when? Additional cash raising may dilute the value of your shares, and since mybet Holding is currently burning more cash than it is making, it’s likely the business will need funding for future growth. mybet Holding may need to come to market again, but the question is, when? Below, I’ve analysed the most recent financial data to help answer this question. Check out our latest analysis for mybet Holding

What is cash burn?

mybet Holding’s expenses are currently higher than the money it makes from its day-to-day operations, which means it is funding its overhead with equity capital a.k.a. its cash. With a negative operating cash flow of -€1.27M, mybet Holding is chipping away at its €5.10M cash reserves in order to run its business. The cash burn rate refers to the rate at which the company uses up its supply of cash over time. The riskiest factor facing investors of the company is the potential for the company to run out of cash without the ability to raise more money, i.e. the company goes out of business. mybet Holding operates in the casinos and gaming industry, which delivered positive earnings in the past year. This means, on average, its industry peers operating are profitable. mybet Holding runs the risk of running down its cash supply too fast, or falling behind its profitable peers by investing too little.

DB:A2LQ00 Income Statement Jun 7th 18
DB:A2LQ00 Income Statement Jun 7th 18

When will mybet Holding need to raise more cash?

mybet Holding has to pay its employees and other necessities such as rent and admin costs in order to keep its business running. These costs are called operational expenses, which is sometimes shortened to opex. In this calculation I’ve only included recurring sales, general and admin (SG&A) expenses, and R&D expenses occured within they year. Opex declined by 25.00% over the past year, which could be an indication of mybet Holding putting the brakes on ramping up high growth. If mybet Holding kept its opex level at €618.00K, it may not need to raise capital for another couple of years. Although this is a relatively simplistic calculation, and mybet Holding may continue to reduce its costs further or open a new line of credit instead of issuing new equity shares, the analysis still gives us an idea of the company’s timeline and when things will have to start changing, since its current operation is unsustainable.

Next Steps:

Investors can breathe easy knowing that mybet Holding probably won’t be coming to market any time soon. Although we haven’t accounted for all possible expenses for the company, on a high level, we believe the company doesn’t have an immediate cash problem based on this cash burn analysis. In addition to this analysis, I suggest you take a look at their expected revenue growth to determine the timing of future profitability as well. This is only a rough assessment of financial health, and I’m sure A2LQ00 has company-specific issues impacting its cash management decisions. I suggest you continue to research mybet Holding to get a better picture of the company by looking at:
  1. Historical Performance: What has A2LQ00’s returns 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.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on mybet Holding’s board and the CEO’s back ground.
  3. Other High-Performing Stocks: If you believe you should cushion your portfolio with something less risky, scroll through our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2017. This may not be consistent with full year annual report figures. Operating expenses include only SG&A and one-year R&D.