Is ARHT Media (CVE:ART) In A Good Position To Deliver On Growth Plans?

Simply Wall St
·4 min read

We can readily understand why investors are attracted to unprofitable companies. For example, biotech and mining exploration companies often lose money for years before finding success with a new treatment or mineral discovery. But while history lauds those rare successes, those that fail are often forgotten; who remembers Pets.com?

So, the natural question for ARHT Media (CVE:ART) shareholders is whether they should be concerned by its rate of cash burn. For the purposes of this article, cash burn is the annual rate at which an unprofitable company spends cash to fund its growth; its negative free cash flow. The first step is to compare its cash burn with its cash reserves, to give us its 'cash runway'.

See our latest analysis for ARHT Media

How Long Is ARHT Media's Cash Runway?

You can calculate a company's cash runway by dividing the amount of cash it has by the rate at which it is spending that cash. As at September 2022, ARHT Media had cash of CA$6.5m and such minimal debt that we can ignore it for the purposes of this analysis. Importantly, its cash burn was CA$8.1m over the trailing twelve months. So it had a cash runway of approximately 10 months from September 2022. That's quite a short cash runway, indicating the company must either reduce its annual cash burn or replenish its cash. You can see how its cash balance has changed over time in the image below.

debt-equity-history-analysis
debt-equity-history-analysis

How Well Is ARHT Media Growing?

ARHT Media boosted investment sharply in the last year, with cash burn ramping by 65%. While that isa little concerning at a glance, the company has a track record of recent growth, evidenced by the impressive 66% growth in revenue, over the very same year. On balance, we'd say the company is improving over time. In reality, this article only makes a short study of the company's growth data. This graph of historic revenue growth shows how ARHT Media is building its business over time.

How Easily Can ARHT Media Raise Cash?

ARHT Media seems to be in a fairly good position, in terms of cash burn, but we still think it's worthwhile considering how easily it could raise more money if it wanted to. Issuing new shares, or taking on debt, are the most common ways for a listed company to raise more money for its business. One of the main advantages held by publicly listed companies is that they can sell shares to investors to raise cash and fund growth. By looking at a company's cash burn relative to its market capitalisation, we gain insight on how much shareholders would be diluted if the company needed to raise enough cash to cover another year's cash burn.

ARHT Media has a market capitalisation of CA$34m and burnt through CA$8.1m last year, which is 24% of the company's market value. That's not insignificant, and if the company had to sell enough shares to fund another year's growth at the current share price, you'd likely witness fairly costly dilution.

Is ARHT Media's Cash Burn A Worry?

On this analysis of ARHT Media's cash burn, we think its revenue growth was reassuring, while its increasing cash burn has us a bit worried. Even though we don't think it has a problem with its cash burn, the analysis we've done in this article does suggest that shareholders should give some careful thought to the potential cost of raising more money in the future. On another note, ARHT Media has 3 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

Of course ARHT Media may not be the best stock to buy. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here

  • Up next
  • Up next
  • Up next
  • Up next

Latest Stories

  • 20 Countries with the Highest Cancer Survival Rates in the World

    In this article, we will be taking a look at the 20 countries with the highest cancer survival rates in the world. If you do not want to learn about the cancer treatment in the US, head straight to the 5 Countries with the Highest Cancer Survival Rates in the World. Navigating the Terrain: The […]

  • 'Good tummy camouflage': This flattering frock is a steal at $34 — save over 40%

    More than 5,000 shoppers rave about this comfy midi dress — and it has pockets!

  • Stablecoin Tether gets boost as dollar alternative in emerging markets, CEO says

    Stablecoin Tether's recent growth is being driven by its use as an alternative to the U.S. dollar in emerging markets, rather than by demand for cryptocurrency trading, Tether CEO Paolo Ardoino told Reuters on Friday. Tether issues a stablecoin, also called Tether or USDT, which is designed to maintain a constant value of $1 and is widely used in crypto-to-crypto trading. It has grown rapidly in recent years, hitting more than $100 billion worth of Tether tokens in circulation in March.

  • Not Sure What To Do With Your Old Coins or Bills? Let These 3 Experts Help You

    Not all old coins or dollar bills are unique, but some could be worth thousands of dollars. And if you do have old currency lying around, it doesn't hurt to check and see what it's worth. Check Out:...

  • Vitesse Arnhem relegated from Eredivisie after 18-point deduction

    The Dutch football association has deducted 18 points from Vitesse Arnhem, officially confirming the club’s relegation

  • Diplomacy and drones: how Israel’s attack on Iran unfolded

    Country’s leaders took it time to weigh its response to Iran’s strike under gaze of allies urging restraint

  • Welcome to 'peak boomer' era: A wave of retirees is about to blow through their savings and cling to Social Security to stay afloat

    While more older boomers tend to have a pension, a looming wave of younger retirees are about to strain the economy and Social Security.

  • Pandas coming to CA zoo for first time in decades — and city calls it a ‘major boost’

    Pandas last were at the zoo temporarily in 1984 and 1985.

  • Organisers of Jewish pilgrimage in Tunisia cancel annual celebrations over Gaza

    An annual Jewish pilgrimage to Tunisia's Djerba‮ ‬synagogue and celebration has been cancelled due to the war in Gaza, the head of the organising committee, Perez Trabelsi, told Reuters on Friday. Trabelsi added that the committee has reduced the annual pilgrimage to limited rituals only inside the temple, and expects a very small number to arrive from France due to the tense situation in the Middle East. The southern island of Djerba – a holiday destination – is home to Africa’s oldest synagogue and the annual pilgrimage,‮ ‬attract thousands of Jews annually who come from Israel and several European countries.

  • Financial Experts: 7 Things You’ll Regret Doing With a $10K Raise

    When you get a significant raise, it can be tempting to splurge on something big -- like a vacation, new computer or another big-ticket item. But while rewarding yourself for your hard work doesn't...

  • Czech billionaire ‘very serious’ about bid for Royal Mail

    The Czech billionaire circling Royal Mail is “very serious” about a takeover, a source close to negotiations has said, as it prepares to mount a defence.

  • 6 Top Tips for How To Turn $1,000 Into $10,000

    The opportunity to multiply an initial investment by 10 is one that most people wouldn't pass up. However, the truth is that turning $1,000 into $10,000 is probably not going to happen overnight -- or...

  • Truss defies her critics – again

    Former PM turned writer Liz Truss can thumb her nose at her critics, now that her memoir is already being reprinted. “It sold out the day before it was published,” she tells me. Truss gave a hint at her good news at the book’s launch at the offices of The Spectator. “Ten Years To Save The West has overtaken an air fryer cookbook on the Amazon league tables,” Truss trilled. The only way is up, Liz!

  • Scammers tried to ruin my holiday. They picked the wrong woman

    Sun’s out, scum’s out. Or to put another way; watch out or We’re All Going On A Scammers’ Holiday.

  • The last time I smacked my child was a moment of pathetic poignancy and pitiful guilt

    That definitively onomatopoeic word has been bounding about this week: smacking. The very sound of the word delivering pain. I hear the word smack and feel the need to duck. This time it’s doctors – the Royal College of Paediatrics and Child Health – issuing a report to say that smacking can be damaging to children’s behaviour, health and wellbeing.

  • Telegraph wins Website of the Year for second year in a row

    The Telegraph has won Website of the Year for the second year running at the Press Awards.

  • BBC Two is 60 – but will it reach 70?

    The launch of BBC Two did not go to plan. It was April 20 1964 and, after a weeks-long advertising campaign featuring a cartoon kangaroo and her joey, Britain’s third television station was set to combine bold programme-making with cutting-edge technology.

  • Not a toddler, not a parent, but still love 'Bluey'? You're not alone

    PHOENIX (AP) — A small blue dog with an Australian accent has captured the hearts of people across the world. She's the title character of “Bluey,” a kids' program consisting of seven-minute episodes that have enraptured children and adults alike. This week's release of its longest episode yet — at a whopping 28 minutes — prompted an outpouring of appreciation for the show, even from those who are neither toddler nor parent. “Bluey” follows an Australian blue heeler who, along with her sister (a

  • Apple pulls WhatsApp and Threads from App Store on Beijing's orders

    HONG KONG (AP) — Apple said it had removed Meta’s WhatsApp messaging app and its Threads social media app from the App Store in China to comply with orders from Chinese authorities. The apps were removed from the store on Friday after Chinese officials cited unspecified national security concerns. Their removal comes amid elevated tensions between the U.S. and China over trade, technology and national security. The U.S. has threatened to ban TikTok over national security concerns. But while TikT

  • Netflix Stock Tumbles On Soft Guidance, Reduced Disclosure

    Netflix stock plunged after the streaming video leader said it would stop giving quarterly subscriber numbers next year.