Lotus Technology Inc. (NASDAQ:LOT): Is Breakeven Near?

With the business potentially at an important milestone, we thought we'd take a closer look at Lotus Technology Inc.'s (NASDAQ:LOT) future prospects. Lotus Technology Inc. engages in the design, development, and sale of battery electric lifestyle vehicles worldwide. On 31 December 2023, the US$6.4b market-cap company posted a loss of US$757m for its most recent financial year. As path to profitability is the topic on Lotus Technology's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Lotus Technology

According to some industry analysts covering Lotus Technology, breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$141m in 2026. Therefore, the company is expected to breakeven roughly 2 years from today. 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 69% is expected, which signals high confidence from analysts. 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 Lotus Technology given that this is a high-level summary, but, bear in mind 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 issue worth mentioning. Lotus Technology currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

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

1. Historical Track Record: What has Lotus Technology'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 Lotus Technology'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.