Is Lazydays Holdings (NASDAQ:GORV) Using Debt In A Risky Way?

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. As with many other companies Lazydays Holdings, Inc. (NASDAQ:GORV) makes use of debt. But the more important question is: how much risk is that debt creating?

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When Is Debt Dangerous?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. 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. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Lazydays Holdings's Net Debt?

You can click the graphic below for the historical numbers, but it shows that Lazydays Holdings had US$336.7m of debt in March 2025, down from US$562.6m, one year before. However, because it has a cash reserve of US$19.7m, its net debt is less, at about US$317.0m.

How Strong Is Lazydays Holdings' Balance Sheet?

We can see from the most recent balance sheet that Lazydays Holdings had liabilities of US$283.0m falling due within a year, and liabilities of US$146.2m due beyond that. On the other hand, it had cash of US$19.7m and US$28.1m worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by US$381.4m.

This deficit casts a shadow over the US$23.9m company, like a colossus towering over mere mortals. So we'd watch its balance sheet closely, without a doubt. After all, Lazydays Holdings would likely require a major re-capitalisation if it had to pay its creditors today. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Lazydays Holdings will need earnings to service that debt. So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.

View our latest analysis for Lazydays Holdings

Over 12 months, Lazydays Holdings made a loss at the EBIT level, and saw its revenue drop to US$767m, which is a fall of 27%. To be frank that doesn't bode well.

Caveat Emptor

Not only did Lazydays Holdings's revenue slip over the last twelve months, but it also produced negative earnings before interest and tax (EBIT). Indeed, it lost a very considerable US$43m at the EBIT level. Reflecting on this and the significant total liabilities, it's hard to know what to say about the stock because of our intense dis-affinity for it. Like every long-shot we're sure it has a glossy presentation outlining its blue-sky potential. But the reality is that it is low on liquid assets relative to liabilities, and it lost US$173m in the last year. So we think buying this stock is risky. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. For example Lazydays Holdings has 4 warning signs (and 3 which are significant) we think you should know about.

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.

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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.