Chicken Soup for the Soul Entertainment, Inc. (NASDAQ:CSSE) Is Expected To Breakeven In The Near Future

With the business potentially at an important milestone, we thought we'd take a closer look at Chicken Soup for the Soul Entertainment, Inc.'s (NASDAQ:CSSE) future prospects. Chicken Soup for the Soul Entertainment, Inc. The US$123m market-cap company posted a loss in its most recent financial year of US$59m and a latest trailing-twelve-month loss of US$74m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on Chicken Soup for the Soul Entertainment's 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.

Check out our latest analysis for Chicken Soup for the Soul Entertainment

Chicken Soup for the Soul Entertainment is bordering on breakeven, according to the 7 American Entertainment analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$37m in 2024. So, the company is predicted to breakeven approximately 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 70% 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.

We're not going to go through company-specific developments for Chicken Soup for the Soul Entertainment given that this is a high-level summary, but, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with Chicken Soup for the Soul Entertainment is its debt-to-equity ratio of 130%. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Chicken Soup for the Soul Entertainment, so if you are interested in understanding the company at a deeper level, take a look at Chicken Soup for the Soul Entertainment's company page on Simply Wall St. We've also compiled a list of essential factors you should further research:

1. Valuation: What is Chicken Soup for the Soul Entertainment 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 Chicken Soup for the Soul Entertainment 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 Chicken Soup for the Soul Entertainment’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.