Market Sentiment Around Loss-Making Smart Eye AB (publ) (STO:SEYE)

We feel now is a pretty good time to analyse Smart Eye AB (publ)'s (STO:SEYE) business as it appears the company may be on the cusp of a considerable accomplishment. Smart Eye AB (publ) develops artificial intelligence powered eye-tracking technology that understands, assists, and predicts human intentions and actions in Sweden and internationally. On 31 December 2020, the kr3.9b market-cap company posted a loss of kr78m for its most recent financial year. The most pressing concern for investors is Smart Eye's path to profitability – when will it 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 Smart Eye

According to some industry analysts covering Smart Eye, breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of kr37m in 2022. So, the company is predicted to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 103%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Smart Eye's growth isn’t the focus of this broad overview, 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.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 0.5% 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 too many aspects of Smart Eye to cover in one brief article, but the key fundamentals for the company can all be found in one place – Smart Eye's company page on Simply Wall St. We've also compiled a list of important aspects you should look at:

1. Valuation: What is Smart Eye 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 Smart Eye 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 Smart Eye’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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