SkyWater Technology, Inc.'s (NASDAQ:SKYT) Path To Profitability

SkyWater Technology, Inc. (NASDAQ:SKYT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. SkyWater Technology, Inc., together with its subsidiaries, operates as a pure-play technology foundry that engages in the provision of semiconductor development, manufacturing, and packaging services in the United States. The US$442m market-cap company announced a latest loss of US$31m on 31 December 2023 for its most recent financial year result. The most pressing concern for investors is SkyWater Technology's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for SkyWater Technology

According to the 4 industry analysts covering SkyWater Technology, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$10m in 2025. So, the company is predicted to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 134% 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.

Given this is a high-level overview, we won’t go into details of SkyWater Technology's upcoming projects, but, take into account that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. SkyWater Technology currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in SkyWater Technology's case is 58%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on SkyWater Technology, so if you are interested in understanding the company at a deeper level, take a look at SkyWater Technology's company page on Simply Wall St. We've also put together a list of essential factors you should further examine:

1. Valuation: What is SkyWater Technology 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 SkyWater Technology 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 SkyWater Technology’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. 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.