Spark Networks SE's (NYSEMKT:LOV) About To Shift From Loss To Profit

Spark Networks SE (NYSEMKT:LOV) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Spark Networks SE operates online dating sites and mobile applications. The US$141m market-cap company’s loss lessened since it announced a €15m loss in the full financial year, compared to the latest trailing-twelve-month loss of €11m, as it approaches breakeven. The most pressing concern for investors is Spark Networks' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Spark Networks

Consensus from 2 of the American Interactive Media and Services analysts is that Spark Networks is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of €8.2m in 2021. Therefore, the company is expected to breakeven roughly a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 50% 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.

Given this is a high-level overview, we won’t go into details of Spark Networks' upcoming projects, though, keep 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 issue worth mentioning. Spark Networks currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Spark Networks' case is 60%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Spark Networks to cover in one brief article, but the key fundamentals for the company can all be found in one place – Spark Networks' company page on Simply Wall St. We've also compiled a list of relevant factors you should look at:

1. Valuation: What is Spark Networks 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 Spark Networks 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 Spark Networks’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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