When Will Sohu.com Limited (NASDAQ:SOHU) Breakeven?

With the business potentially at an important milestone, we thought we'd take a closer look at Sohu.com Limited's (NASDAQ:SOHU) future prospects. Sohu.com Limited provides online media, search, and game services on personal computers (PCs) and mobile devices in the People’s Republic of China. With the latest financial year loss of US$127m and a trailing-twelve-month loss of US$111m, the US$640m market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Sohu.com will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Sohu.com

Consensus from 3 of the American Interactive Media and Services analysts is that Sohu.com is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$13m in 2022. So, the company is predicted to breakeven approximately 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 103% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Sohu.com given that this is a high-level summary, though, 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 19% 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.

Next Steps:

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

1. Valuation: What is Sohu.com 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 Sohu.com 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 Sohu.com’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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