Valens Semiconductor Ltd.'s (NYSE:VLN) Path To Profitability
We feel now is a pretty good time to analyse Valens Semiconductor Ltd.'s (NYSE:VLN) business as it appears the company may be on the cusp of a considerable accomplishment. Valens Semiconductor Ltd. engages in the provision of semiconductor products that enables high-speed video and data transmission for the audio-video and automotive industries. The US$250m market-cap company’s loss lessened since it announced a US$28m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$23m, as it approaches breakeven. As path to profitability is the topic on Valens Semiconductor's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
See our latest analysis for Valens Semiconductor
Consensus from 4 of the American Semiconductor analysts is that Valens Semiconductor is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of US$27m in 2025. Therefore, the company is expected to breakeven roughly 2 years 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 85% is expected, which is extremely buoyant. 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 Valens Semiconductor given that this is a high-level summary, though, take into account that by and large 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 aspect worth mentioning. Valens Semiconductor currently has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
Next Steps:
There are key fundamentals of Valens Semiconductor 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 Valens Semiconductor, take a look at Valens Semiconductor's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further examine:
Historical Track Record: What has Valens Semiconductor'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 Valens Semiconductor'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.
