When Can We Expect A Profit From Gaia, Inc. (NASDAQ:GAIA)?

Gaia, Inc.'s (NASDAQ:GAIA): Gaia, Inc. operates a digital video subscription service and online community for underserved member base worldwide. The US$179m market-cap company announced a latest loss of -US$17.9m on 31 December 2019 for its most recent financial year result. Many investors are wondering the rate at which GAIA will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for GAIA’s growth and when analysts expect the company to become profitable.

See our latest analysis for Gaia

Consensus from the 4 Entertainment analysts is GAIA is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$2.3m in 2021. GAIA is therefore projected to breakeven around a few months from now. How fast will GAIA have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 111% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, GAIA may become profitable much later than analysts predict.

NasdaqGM:GAIA Past and Future Earnings April 3rd 2020
NasdaqGM:GAIA Past and Future Earnings April 3rd 2020

I’m not going to go through company-specific developments for GAIA given that this is a high-level summary, though, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before I wrap up, there’s one aspect worth mentioning. GAIA has managed its capital prudently, with debt making up 27% of equity. This means that GAIA has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on GAIA, so if you are interested in understanding the company at a deeper level, take a look at GAIA’s company page on Simply Wall St. I’ve also put together a list of important aspects you should further examine:

  1. Historical Track Record: What has GAIA'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.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Gaia’s board and the CEO’s back ground.

  3. 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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