Is PSQ Holdings (NYSE:PSQH) Using Too Much Debt?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. We note that PSQ Holdings, Inc. (NYSE:PSQH) does have debt on its balance sheet. But should shareholders be worried about its use of debt?

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When Is Debt Dangerous?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. When we think about a company's use of debt, we first look at cash and debt together.

How Much Debt Does PSQ Holdings Carry?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 PSQ Holdings had US$32.5m of debt, an increase on US$22.0m, over one year. However, it also had US$20.6m in cash, and so its net debt is US$11.9m.

How Strong Is PSQ Holdings' Balance Sheet?

Zooming in on the latest balance sheet data, we can see that PSQ Holdings had liabilities of US$10.9m due within 12 months and liabilities of US$32.2m due beyond that. Offsetting this, it had US$20.6m in cash and US$5.05m in receivables that were due within 12 months. So it has liabilities totalling US$17.4m more than its cash and near-term receivables, combined.

Since publicly traded PSQ Holdings shares are worth a total of US$100.1m, it seems unlikely that this level of liabilities would be a major threat. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine PSQ Holdings's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

View our latest analysis for PSQ Holdings

Over 12 months, PSQ Holdings reported revenue of US$28m, which is a gain of 94%, although it did not report any earnings before interest and tax. Shareholders probably have their fingers crossed that it can grow its way to profits.

Caveat Emptor

Despite the top line growth, PSQ Holdings still had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost a very considerable US$47m at the EBIT level. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. So we think its balance sheet is a little strained, though not beyond repair. Another cause for caution is that is bled US$32m in negative free cash flow over the last twelve months. So in short it's a really risky stock. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. For example PSQ Holdings has 4 warning signs (and 2 which are significant) we think you should know about.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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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.