Loss-Making HUYA Inc. (NYSE:HUYA) Set To Breakeven

With the business potentially at an important milestone, we thought we'd take a closer look at HUYA Inc.'s (NYSE:HUYA) future prospects. HUYA Inc., through its subsidiaries, operates game live streaming platforms in the People’s Republic of China. With the latest financial year loss of CN¥48m and a trailing-twelve-month loss of CN¥153m, the US$726m market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on HUYA's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

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According to the 12 industry analysts covering HUYA, the consensus is that breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of CN¥65m in 2025. Therefore, the company is expected to breakeven roughly 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 55% 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 HUYA 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.

Check out our latest analysis for HUYA

One thing we’d like to point out is that HUYA has no debt on its balance sheet, which is rare for a 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 key fundamentals of HUYA 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 HUYA, take a look at HUYA's company page on Simply Wall St. We've also put together a list of relevant factors you should further research:

1. Valuation: What is HUYA 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 HUYA 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 HUYA’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.