With the business potentially at an important milestone, we thought we'd take a closer look at Motorsport Games Inc.'s (NASDAQ:MSGM) future prospects. Motorsport Games Inc. develops and publishes multi-platform racing video games in the United States. With the latest financial year loss of US$1.8m and a trailing-twelve-month loss of US$21m, the US$125m market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on Motorsport Games' 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.
According to the 3 industry analysts covering Motorsport Games, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$6.0m in 2023. The company is therefore projected to breakeven around 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 81% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Motorsport Games' growth isn’t the focus of this broad overview, however, bear 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 aspect worth mentioning. The company has managed its capital judiciously, with debt making up 0.5% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
There are key fundamentals of Motorsport Games which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Motorsport Games, take a look at Motorsport Games' company page on Simply Wall St. We've also compiled a list of pertinent aspects you should look at:
- Historical Track Record: What has Motorsport Games' 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.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Motorsport Games' board and the CEO’s background.
- 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.
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