Dada Nexus Limited (NASDAQ:DADA) Has Found A Path To Profitability

Dada Nexus Limited (NASDAQ:DADA) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Dada Nexus Limited operates a platform of local on-demand retail and delivery in the People’s Republic of China. With the latest financial year loss of CN¥2.0b and a trailing-twelve-month loss of CN¥1.0b, the US$553m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Dada Nexus' 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 Dada Nexus

Consensus from 14 of the American Consumer Retailing analysts is that Dada Nexus is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of CN¥235m in 2024. So, the company is predicted to breakeven approximately 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 67% year-on-year, on average, 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 Dada Nexus given that this is a high-level summary, but, take into account that typically 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 Dada Nexus has no debt on its balance sheet, which is rare for a loss-making growth company, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

There are key fundamentals of Dada Nexus 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 Dada Nexus, take a look at Dada Nexus' company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further research:

1. Valuation: What is Dada Nexus 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 Dada Nexus 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 Dada Nexus’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.