We Might See A Profit From MAG Interactive AB (publ) (STO:MAGI) Soon

We feel now is a pretty good time to analyse MAG Interactive AB (publ)'s (STO:MAGI) business as it appears the company may be on the cusp of a considerable accomplishment. MAG Interactive AB (publ) develops and publishes casual mobile games worldwide. The kr614m market-cap company announced a latest loss of kr17m on 31 August 2020 for its most recent financial year result. As path to profitability is the topic on MAG Interactive's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for MAG Interactive

According to the 2 industry analysts covering MAG Interactive, the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of kr50k 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 99%, 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, however, take into account that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that MAG Interactive has no debt on its balance sheet, which is quite unusual for a cash-burning loss-making, growth company, which typically has high debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect 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 compiled a list of pertinent 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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