Is Eightco Holdings (NASDAQ:ORBS) Using Debt Sensibly?

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. As with many other companies Eightco Holdings Inc. (NASDAQ:ORBS) makes use of debt. But should shareholders be worried about its use of debt?

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When Is Debt Dangerous?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first step when considering a company's debt levels is to consider its cash and debt together.

How Much Debt Does Eightco Holdings Carry?

The image below, which you can click on for greater detail, shows that Eightco Holdings had debt of US$10.7m at the end of September 2025, a reduction from US$28.3m over a year. But it also has US$23.7m in cash to offset that, meaning it has US$13.1m net cash.

How Strong Is Eightco Holdings' Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Eightco Holdings had liabilities of US$16.8m due within 12 months and no liabilities due beyond that. Offsetting this, it had US$23.7m in cash and US$254.8k in receivables that were due within 12 months. So it can boast US$7.21m more liquid assets than total liabilities.

This state of affairs indicates that Eightco Holdings' balance sheet looks quite solid, as its total liabilities are just about equal to its liquid assets. So while it's hard to imagine that the US$494.6m company is struggling for cash, we still think it's worth monitoring its balance sheet. Simply put, the fact that Eightco Holdings has more cash than debt is arguably a good indication that it can manage its debt safely. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Eightco Holdings will need earnings to service that debt. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

See our latest analysis for Eightco Holdings

Over 12 months, Eightco Holdings reported revenue of US$43m, which is a gain of 59%, although it did not report any earnings before interest and tax. With any luck the company will be able to grow its way to profitability.

So How Risky Is Eightco Holdings?

Statistically speaking companies that lose money are riskier than those that make money. And in the last year Eightco Holdings had an earnings before interest and tax (EBIT) loss, truth be told. Indeed, in that time it burnt through US$6.8m of cash and made a loss of US$32m. But the saving grace is the US$13.1m on the balance sheet. That means it could keep spending at its current rate for more than two years. Eightco Holdings's revenue growth shone bright over the last year, so it may well be in a position to turn a profit in due course. Pre-profit companies are often risky, but they can also offer great rewards. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. Case in point: We've spotted 3 warning signs for Eightco Holdings you should be aware of.

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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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.