Loss-Making MAG Interactive AB (publ) (STO:MAGI) Set To Breakeven

With the business potentially at an important milestone, we thought we'd take a closer look at MAG Interactive AB (publ)'s (STO:MAGI) future prospects. MAG Interactive AB (publ) develops and publishes mobile games worldwide. With the latest financial year loss of kr17m and a trailing-twelve-month loss of kr15m, the kr1.0b market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which MAG Interactive 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.

View our latest analysis for MAG Interactive

According to the 2 industry analysts covering MAG Interactive, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of kr4.7m in 2021. Therefore, the company is expected to breakeven roughly 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 83%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of MAG Interactive's upcoming projects, though, keep in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 0.2% 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 MAG Interactive, so if you are interested in understanding the company at a deeper level, take a look at MAG Interactive's company page on Simply Wall St. We've also put together a list of essential factors you should further examine:

1. Valuation: What is MAG Interactive 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 MAG Interactive 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 MAG Interactive’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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