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With the business potentially at an important milestone, we thought we'd take a closer look at Dolphin Entertainment, Inc.'s (NASDAQ:DLPN) future prospects. Dolphin Entertainment, Inc., together with its subsidiaries, operates as an independent entertainment marketing and premium content development company in the United States. The US$100m market-cap company posted a loss in its most recent financial year of US$1.9m and a latest trailing-twelve-month loss of US$5.0m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Dolphin Entertainment will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
According to the 2 industry analysts covering Dolphin Entertainment, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$3.6m in 2022. Therefore, the company is expected 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 155% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Dolphin Entertainment given that this is a high-level summary, however, bear in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we would like to bring into light with Dolphin Entertainment is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Dolphin Entertainment's case is 41%. Note that a higher debt obligation increases the risk in investing in the loss-making company.
This article is not intended to be a comprehensive analysis on Dolphin Entertainment, so if you are interested in understanding the company at a deeper level, take a look at Dolphin Entertainment's company page on Simply Wall St. We've also compiled a list of key factors you should further research:
Historical Track Record: What has Dolphin Entertainment'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.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Dolphin Entertainment'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.
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.
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