Breakeven On The Horizon For Litium AB (publ) (STO:LITI)

We feel now is a pretty good time to analyse Litium AB (publ)'s (STO:LITI) business as it appears the company may be on the cusp of a considerable accomplishment. Litium AB (publ) operates cloud based e-commerce platform for retailers, e-tailers, and B2B businesses. On 31 December 2020, the kr364m market-cap company posted a loss of kr19m for its most recent financial year. As path to profitability is the topic on Litium's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for Litium

According to some industry analysts covering Litium, breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of kr2.4m in 2022. So, the company is predicted to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 98% year-on-year, on average, which is rather optimistic! 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 Litium given that this is a high-level summary, but, take into account that generally 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 The company has managed its capital prudently, with debt making up 3.5% 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:

There are key fundamentals of Litium which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Litium, take a look at Litium's company page on Simply Wall St. We've also put together a list of key factors you should further research:

1. Valuation: What is Litium 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 Litium 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 Litium’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.

If you’re looking to trade Litium, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.