Razer Inc.'s (HKG:1337): Razer Inc. designs, develops, and sells gaming hardware, software, and services under the Razer brand for gamers worldwide. The HK$18b market-cap company announced a latest loss of -US$97.0m on 31 December 2018 for its most recent financial year result. As path to profitability is the topic on 1337’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for 1337’s growth and when analysts expect the company to become profitable.

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According to the 3 industry analysts covering 1337, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$41m in 2021. So, 1337 is predicted to breakeven approximately 2 years from now. In order to meet this breakeven date, I calculated the rate at which 1337 must grow year-on-year. It turns out an average annual growth rate of 78% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving 1337’s growth isn’t the focus of this broad overview, however, bear in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before I wrap up, there’s one aspect worth mentioning. 1337 has managed its capital judiciously, with debt making up 0.004% of equity. This means that 1337 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:

There are key fundamentals of 1337 which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at 1337, take a look at 1337’s company page on Simply Wall St. I’ve also put together a list of essential factors you should look at:

1. Valuation: What is 1337 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 1337 is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Razer’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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.