Breakeven On The Horizon For EHang Holdings Limited (NASDAQ:EH)

We feel now is a pretty good time to analyse EHang Holdings Limited's (NASDAQ:EH) business as it appears the company may be on the cusp of a considerable accomplishment. EHang Holdings Limited operates as an autonomous aerial vehicle (AAV) technology platform company in the People’s Republic of China, East Asia, West Asia, Europe, and internationally. The company’s loss has recently broadened since it announced a CN¥328m loss in the full financial year, compared to the latest trailing-twelve-month loss of CN¥348m, moving it further away from breakeven. As path to profitability is the topic on EHang Holdings' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for EHang Holdings

According to some industry analysts covering EHang Holdings, breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of CN¥191m in 2025. Therefore, the company is expected to breakeven roughly 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 rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving EHang Holdings' growth isn’t the focus of this broad overview, though, bear in mind that typically 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. EHang Holdings currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in EHang Holdings' case is 48%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on EHang Holdings, so if you are interested in understanding the company at a deeper level, take a look at EHang Holdings' company page on Simply Wall St. We've also put together a list of important factors you should further research:

1. Historical Track Record: What has EHang Holdings' 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 EHang Holdings' 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.