Market Sentiment Around Loss-Making AutoWeb, Inc. (NASDAQ:AUTO)

By
Simply Wall St
Published
August 12, 2021
NasdaqCM:AUTO
Source: Shutterstock

AutoWeb, Inc. (NASDAQ:AUTO) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. AutoWeb, Inc. operates as a digital marketing company for the automotive industry in the United States. The US$35m market-cap company’s loss lessened since it announced a US$6.8m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$1.4m, as it approaches breakeven. As path to profitability is the topic on AutoWeb's 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.

See our latest analysis for AutoWeb

AutoWeb is bordering on breakeven, according to the 4 American Interactive Media and Services analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$3.0m in 2023. 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 65% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
NasdaqCM:AUTO Earnings Per Share Growth August 13th 2021

We're not going to go through company-specific developments for AutoWeb given that this is a high-level summary, however, keep in mind that generally 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 issue worth mentioning. AutoWeb currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in AutoWeb's case is 59%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of AutoWeb to cover in one brief article, but the key fundamentals for the company can all be found in one place – AutoWeb's company page on Simply Wall St. We've also put together a list of key aspects you should further examine:

  1. Historical Track Record: What has AutoWeb'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 AutoWeb'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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