With the business potentially at an important milestone, we thought we'd take a closer look at Red Cat Holdings, Inc.'s (NASDAQ:RCAT) future prospects. Red Cat Holdings, Inc., through its subsidiaries, provides various products, services, and solutions to the drone industry. The US$114m market-cap company’s loss lessened since it announced a US$13m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$10m, as it approaches breakeven. Many investors are wondering about the rate at which Red Cat Holdings 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.

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According to some industry analysts covering Red Cat Holdings, breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$18m in 2023. The company is therefore projected to breakeven just over a year from today. 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 183% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

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Given this is a high-level overview, we won’t go into details of Red Cat Holdings' upcoming projects, but, bear in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

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One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 3.0% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

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There are key fundamentals of Red Cat Holdings 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 Red Cat Holdings, take a look at Red Cat Holdings' company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further research:

Historical Track Record: What has Red Cat Holdings' 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 Red Cat Holdings' board and the CEO’s background.

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.

From yahoo