Yahoo Finance When Can We Expect A Profit From Youdao, Inc. (NYSE:DAO)?
We feel now is a pretty good time to analyse Youdao, Inc.'s (NYSE:DAO) business as it appears the company may be on the cusp of a considerable accomplishment. Youdao, Inc., an internet technology company, provides online services in the field of content, community, communication, and commerce in China. With the latest financial year loss of CN¥895m and a trailing-twelve-month loss of CN¥772m, the US$605m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Youdao's 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.
See our latest analysis for Youdao
Youdao is bordering on breakeven, according to the 7 American Consumer Services analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of CN¥217m in 2024. The company is therefore projected to breakeven around 2 years from today. 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 102%, 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 Youdao's growth isn’t the focus of this broad overview, though, take into account that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one issue worth mentioning. Youdao currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. These losses tend to occur only on paper, however, in other cases it can be forewarning.
Next Steps:
This article is not intended to be a comprehensive analysis on Youdao, so if you are interested in understanding the company at a deeper level, take a look at Youdao's company page on Simply Wall St. We've also put together a list of key factors you should further examine:
Valuation: What is Youdao 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 Youdao 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 Youdao’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.
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