When Will Ambarella, Inc. (NASDAQ:AMBA) Breakeven?

By
Simply Wall St
Published
January 14, 2022
NasdaqGS:AMBA
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Ambarella, Inc. (NASDAQ:AMBA) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Ambarella, Inc. develops semiconductor solutions for video that enable high-definition (HD) and ultra HD compression, image processing, and deep neural network processing worldwide. The US$5.8b market-cap company posted a loss in its most recent financial year of US$60m and a latest trailing-twelve-month loss of US$30m shrinking the gap between loss and breakeven. As path to profitability is the topic on Ambarella's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Ambarella

According to the 17 industry analysts covering Ambarella, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of US$8.0m in 2024. So, the company is predicted to breakeven approximately 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 67% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
NasdaqGS:AMBA Earnings Per Share Growth January 14th 2022

Underlying developments driving Ambarella's growth isn’t the focus of this broad overview, however, take into account that by and large 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 aspect worth mentioning. Ambarella currently has no debt on its balance sheet, which is rare for a loss-making growth company, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

There are too many aspects of Ambarella to cover in one brief article, but the key fundamentals for the company can all be found in one place – Ambarella's company page on Simply Wall St. We've also put together a list of relevant aspects you should further examine:

  1. Valuation: What is Ambarella 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 Ambarella 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 Ambarella’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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