When Can We Expect A Profit From ACV Auctions Inc. (NASDAQ:ACVA)?

We feel now is a pretty good time to analyse ACV Auctions Inc.'s (NASDAQ:ACVA) business as it appears the company may be on the cusp of a considerable accomplishment. ACV Auctions Inc. operates a digital marketplace that connects buyers and sellers for the online auction of wholesale vehicles. With the latest financial year loss of US$75m and a trailing-twelve-month loss of US$78m, the US$2.9b market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which ACV Auctions will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for ACV Auctions

According to the 13 industry analysts covering ACV Auctions, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$11m in 2025. 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 57%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of ACV Auctions' upcoming projects, though, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 27% 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:

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

1. Valuation: What is ACV Auctions 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 ACV Auctions 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 ACV Auctions’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.