Is BARK (NYSE:BARK) Using Debt In A Risky Way?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We note that BARK, Inc. (NYSE:BARK) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. 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 examine debt levels, we first consider both cash and debt levels, together.

What Is BARK's Debt?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 BARK had US$42.7m of debt, an increase on US$40.0m, over one year. But it also has US$84.7m in cash to offset that, meaning it has US$42.0m net cash.

A Look At BARK's Liabilities

According to the last reported balance sheet, BARK had liabilities of US$130.5m due within 12 months, and liabilities of US$35.5m due beyond 12 months. Offsetting this, it had US$84.7m in cash and US$7.42m in receivables that were due within 12 months. So it has liabilities totalling US$73.9m more than its cash and near-term receivables, combined.

This deficit isn't so bad because BARK is worth US$150.1m, and thus could probably raise enough capital to shore up its balance sheet, if the need arose. But we definitely want to keep our eyes open to indications that its debt is bringing too much risk. Despite its noteworthy liabilities, BARK boasts net cash, so it's fair to say it does not have a heavy debt load! When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine BARK's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

See our latest analysis for BARK

Over 12 months, BARK made a loss at the EBIT level, and saw its revenue drop to US$471m, which is a fall of 3.1%. That's not what we would hope to see.

So How Risky Is BARK?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And the fact is that over the last twelve months BARK lost money at the earnings before interest and tax (EBIT) line. Indeed, in that time it burnt through US$19m of cash and made a loss of US$30m. While this does make the company a bit risky, it's important to remember it has net cash of US$42.0m. That kitty means the company can keep spending for growth for at least two years, at current rates. Overall, we'd say the stock is a bit risky, and we're usually very cautious until we see positive free cash flow. 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 - BARK has 2 warning signs we think you should be aware of.

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.