With the business potentially at an important milestone, we thought we'd take a closer look at Dada Nexus Limited's (NASDAQ:DADA) future prospects. Dada Nexus Limited operates a platform of local on-demand retail and delivery in the People’s Republic of China. The US$1.2b market-cap company posted a loss in its most recent financial year of CN¥2.0b and a latest trailing-twelve-month loss of CN¥1.3b shrinking the gap between loss and breakeven. The most pressing concern for investors is Dada Nexus' 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.
Consensus from 15 of the American Consumer Retailing analysts is that Dada Nexus is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of CN¥326m in 2024. So, the company is predicted to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 112% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Dada Nexus' growth isn’t the focus of this broad overview, but, take into account that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we’d like to point out is that Dada Nexus 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.
This article is not intended to be a comprehensive analysis on Dada Nexus, so if you are interested in understanding the company at a deeper level, take a look at Dada Nexus' company page on Simply Wall St. We've also compiled a list of important factors you should look at:
Valuation: What is Dada Nexus 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 Dada Nexus is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Dada Nexus’s board and the CEO’s background.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.