BlueCity Holdings Limited (NASDAQ:BLCT): When Will It Breakeven?

BlueCity Holdings Limited (NASDAQ:BLCT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. BlueCity Holdings Limited operates a platform for LGBTQ community primarily under BlueCity brand in China, India, Korea, Thailand, and Vietnam. The US$478m market-cap company’s loss lessened since it announced a CN¥684m loss in the full financial year, compared to the latest trailing-twelve-month loss of CN¥131m, as it approaches breakeven. Many investors are wondering about the rate at which BlueCity Holdings will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for BlueCity Holdings

Expectations from some of the American Interactive Media and Services analysts is that BlueCity Holdings is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of CN¥68m in 2021. So, the company is predicted to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 61% 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.

Underlying developments driving BlueCity Holdings' growth isn’t the focus of this broad overview, 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 BlueCity Holdings has no debt on its balance sheet, which is quite unusual for a cash-burning loss-making, growth company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

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

1. Valuation: What is BlueCity Holdings 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 BlueCity Holdings 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 BlueCity Holdings’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. 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.
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