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

Simply Wall St
August 12, 2021
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.

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.

When trading AutoWeb or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.