Razer Inc’s (HKG:1337): Razer Inc. designs, develops, and sells gaming hardware, software, and services under the Razer brand for gamers worldwide. The HK$15.73b market-cap posted a loss in its most recent financial year of -US$164.0m and a latest trailing-twelve-month loss of -US$168.4m leading to an even wider gap between loss and breakeven. Many investors are wondering the rate at which 1337 will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for 1337, its year of breakeven and its implied growth rate.
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According to the industry analysts covering 1337, breakeven is near. They expect the company to post a final loss in 2019, before turning a profit of US$49.2m in 2020. So, 1337 is predicted to breakeven approximately a few months from now. What rate will 1337 have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 104%, which is rather optimistic! If this rate turns out to be too aggressive, 1337 may become profitable much later than analysts predict.
Underlying developments driving 1337’s growth isn’t the focus of this broad overview, however, bear in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before I wrap up, there’s one aspect worth mentioning. 1337 has managed its capital judiciously, with debt making up 0.01% of equity. This means that 1337 has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of 1337 to cover in one brief article, but the key fundamentals for the company can all be found in one place – 1337’s company page on Simply Wall St. I’ve also put together a list of relevant factors you should further research:
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Valuation: What is 1337 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 1337 is currently mispriced by the market.
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Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Razer’s board and the CEO’s back ground.
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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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.