Neonode Inc. (NASDAQ:NEON) Could Be Less Than A Year Away From Profitability

Neonode Inc. (NASDAQ:NEON) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Neonode Inc., together with its subsidiaries, develops optical sensing solutions for contactless touch, touch, and gesture sensing in the United States, Japan, South Korea, Germany, Switzerland, France, Sweden, China, and internationally. The US$147m market-cap company posted a loss in its most recent financial year of US$10m and a latest trailing-twelve-month loss of US$11m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Neonode will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for Neonode

Neonode is bordering on breakeven, according to the 2 American Electronic analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$6.9m in 2025. Therefore, the company is expected to breakeven roughly a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 111% 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 Neonode's upcoming projects, though, keep 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 Neonode 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. 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 key fundamentals of Neonode which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Neonode, take a look at Neonode's company page on Simply Wall St. We've also compiled a list of essential aspects you should further research:

1. Historical Track Record: What has Neonode'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 Neonode'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.