Valens Semiconductor Ltd.'s (NYSE:VLN) Shift From Loss To Profit

Valens Semiconductor Ltd. (NYSE:VLN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Valens Semiconductor Ltd. engages in the provision of semiconductor products that enables high-speed video and data transmission for the audio-video and automotive industries. The US$249m market-cap company posted a loss in its most recent financial year of US$28m and a latest trailing-twelve-month loss of US$30m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Valens Semiconductor'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 Valens Semiconductor

Valens Semiconductor is bordering on breakeven, according to the 3 American Semiconductor analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$747k in 2025. The company is therefore projected 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 78% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of Valens Semiconductor's upcoming projects, however, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that Valens Semiconductor has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

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

1. Historical Track Record: What has Valens Semiconductor's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Valens Semiconductor'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.