Stock Analysis

Is Bolt Biotherapeutics (NASDAQ:BOLT) In A Good Position To Deliver On Growth Plans?

Published
NasdaqGS:BOLT
Source: Shutterstock

There's no doubt that money can be made by owning shares of unprofitable businesses. For example, biotech and mining exploration companies often lose money for years before finding success with a new treatment or mineral discovery. But while history lauds those rare successes, those that fail are often forgotten; who remembers Pets.com?

Given this risk, we thought we'd take a look at whether Bolt Biotherapeutics (NASDAQ:BOLT) shareholders should be worried about its cash burn. For the purpose of this article, we'll define cash burn as the amount of cash the company is spending each year to fund its growth (also called its negative free cash flow). We'll start by comparing its cash burn with its cash reserves in order to calculate its cash runway.

View our latest analysis for Bolt Biotherapeutics

When Might Bolt Biotherapeutics Run Out Of Money?

A cash runway is defined as the length of time it would take a company to run out of money if it kept spending at its current rate of cash burn. In September 2022, Bolt Biotherapeutics had US$171m in cash, and was debt-free. Importantly, its cash burn was US$79m over the trailing twelve months. So it had a cash runway of about 2.2 years from September 2022. Arguably, that's a prudent and sensible length of runway to have. Depicted below, you can see how its cash holdings have changed over time.

debt-equity-history-analysis
NasdaqGS:BOLT Debt to Equity History December 1st 2022

How Is Bolt Biotherapeutics' Cash Burn Changing Over Time?

In our view, Bolt Biotherapeutics doesn't yet produce significant amounts of operating revenue, since it reported just US$4.8m in the last twelve months. As a result, we think it's a bit early to focus on the revenue growth, so we'll limit ourselves to looking at how the cash burn is changing over time. With the cash burn rate up 43% in the last year, it seems that the company is ratcheting up investment in the business over time. That's not necessarily a bad thing, but investors should be mindful of the fact that will shorten the cash runway. Clearly, however, the crucial factor is whether the company will grow its business going forward. For that reason, it makes a lot of sense to take a look at our analyst forecasts for the company.

How Hard Would It Be For Bolt Biotherapeutics To Raise More Cash For Growth?

While Bolt Biotherapeutics does have a solid cash runway, its cash burn trajectory may have some shareholders thinking ahead to when the company may need to raise more cash. Companies can raise capital through either debt or equity. Commonly, a business will sell new shares in itself to raise cash and drive growth. We can compare a company's cash burn to its market capitalisation to get a sense for how many new shares a company would have to issue to fund one year's operations.

Bolt Biotherapeutics has a market capitalisation of US$56m and burnt through US$79m last year, which is 141% of the company's market value. That suggests the company may have some funding difficulties, and we'd be very wary of the stock.

Is Bolt Biotherapeutics' Cash Burn A Worry?

Even though its cash burn relative to its market cap makes us a little nervous, we are compelled to mention that we thought Bolt Biotherapeutics' cash runway was relatively promising. Looking at the factors mentioned in this short report, we do think that its cash burn is a bit risky, and it does make us slightly nervous about the stock. Its important for readers to be cognizant of the risks that can affect the company's operations, and we've picked out 3 warning signs for Bolt Biotherapeutics that investors should know when investing in the stock.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies, and this list of stocks growth stocks (according to analyst forecasts)

What are the risks and opportunities for Bolt Biotherapeutics?

Bolt Biotherapeutics, Inc., a clinical-stage biotechnology company, engages in the development of immuno-oncology agents to target tumor cells for elimination by the immune system.

View Full Analysis

Rewards

  • Revenue is forecast to grow 45.73% per year

Risks

  • Earnings are forecast to decline by an average of 0.3% per year for the next 3 years

  • Does not have a meaningful market cap ($56M)

  • Does not have meaningful revenue ($5M)

  • Currently unprofitable and not forecast to become profitable over the next 3 years

View all Risks and Rewards

Share Price

Market Cap

1Y Return

View Company Report

Further research on
Bolt Biotherapeutics

ValuationFinancial HealthInsider TradingManagement Team