Loss-Making TrueCar, Inc. (NASDAQ:TRUE) Expected To Breakeven In The Medium-Term

We feel now is a pretty good time to analyse TrueCar, Inc.'s (NASDAQ:TRUE) business as it appears the company may be on the cusp of a considerable accomplishment. TrueCar, Inc. operates as an internet-based information, technology, and communication services company in the United States. The US$335m market-cap company announced a latest loss of US$50m on 31 December 2023 for its most recent financial year result. The most pressing concern for investors is TrueCar's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for TrueCar

According to the 5 industry analysts covering TrueCar, the consensus is that breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of US$3.7m in 2026. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 77% 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 TrueCar's growth isn’t the focus of this broad overview, though, bear in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. TrueCar currently has no debt on its balance sheet, which is quite unusual for a cash-burning 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 key fundamentals of TrueCar 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 TrueCar, take a look at TrueCar's company page on Simply Wall St. We've also put together a list of pertinent factors you should further examine:

1. Valuation: What is TrueCar 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 TrueCar 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 TrueCar’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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.