Nitro Games Oyj's (STO:NITRO) Path To Profitability

We feel now is a pretty good time to analyse Nitro Games Oyj's (STO:NITRO) business as it appears the company may be on the cusp of a considerable accomplishment. Nitro Games Oyj develops and publishes games for mobiles worldwide. The kr48m market-cap company posted a loss in its most recent financial year of €3.4m and a latest trailing-twelve-month loss of €3.9m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Nitro Games Oyj will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Nitro Games Oyj

Nitro Games Oyj is bordering on breakeven, according to some Swedish Entertainment analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of €400k in 2025. The company is therefore projected to breakeven around 2 years 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 102% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Nitro Games Oyj's growth isn’t the focus of this broad overview, however, take into account that by and large 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. Nitro Games Oyj currently has a debt-to-equity ratio of 194%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

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

1. Historical Track Record: What has Nitro Games Oyj's performance 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 Nitro Games Oyj'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. 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.