With the business potentially at an important milestone, we thought we'd take a closer look at Applied Blockchain, Inc.'s (NASDAQ:APLD) future prospects. Applied Blockchain, Inc. engages in crypto mining and co-hosting operations. The company’s loss has recently broadened since it announced a US$568k loss in the full financial year, compared to the latest trailing-twelve-month loss of US$18m, moving it further away from breakeven. The most pressing concern for investors is Applied Blockchain's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
According to the 4 industry analysts covering Applied Blockchain, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$96m in 2024. So, the company is predicted to breakeven approximately 2 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 72%, 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.
We're not going to go through company-specific developments for Applied Blockchain given that this is a high-level summary, but, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one aspect worth mentioning. Applied Blockchain currently has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which typically has high 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.
There are key fundamentals of Applied Blockchain 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 Applied Blockchain, take a look at Applied Blockchain's company page on Simply Wall St. We've also put together a list of essential aspects you should further research:
Valuation: What is Applied Blockchain 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 Applied Blockchain 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 Applied Blockchain’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.
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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.