CDON AB's (STO:CDON) About To Shift From Loss To Profit

With the business potentially at an important milestone, we thought we'd take a closer look at CDON AB's (STO:CDON) future prospects. CDON AB operates online marketplace in Nordic region. The kr3.8b market-cap company announced a latest loss of kr5.9m on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is CDON's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for CDON

CDON is bordering on breakeven, according to some Swedish Online Retail analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of kr38m in 2021. The company is therefore projected to breakeven around a year 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 52% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for CDON given that this is a high-level summary, but, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that CDON has no debt on its balance sheet, which is quite unusual for a cash-burning 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 CDON, so if you are interested in understanding the company at a deeper level, take a look at CDON's company page on Simply Wall St. We've also put together a list of relevant factors you should further examine:

1. Valuation: What is CDON 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 CDON 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 CDON’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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