Adevinta ASA (OB:ADE) About To Shift From Loss To Profit

Adevinta ASA (OB:ADE) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Adevinta ASA owns and operates online classifieds sites. The company’s loss has recently broadened since it announced a €1.8b loss in the full financial year, compared to the latest trailing-twelve-month loss of €1.8b, moving it further away from breakeven. Many investors are wondering about the rate at which Adevinta will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Adevinta

According to the 17 industry analysts covering Adevinta, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of €226m in 2023. So, the company is predicted to breakeven approximately 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 40% is expected, which signals high confidence from analysts. 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 Adevinta given that this is a high-level summary, but, keep 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 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 Adevinta, so if you are interested in understanding the company at a deeper level, take a look at Adevinta's company page on Simply Wall St. We've also put together a list of pertinent aspects you should look at:

1. Valuation: What is Adevinta 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 Adevinta 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 Adevinta’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.

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.