Sohu.com Limited's (NASDAQ:SOHU): Sohu.com Limited provides online media, search, and game services on personal computers (PCs) and mobile devices in the People’s Republic of China. With the latest financial year loss of -US$126.6m and a trailing-twelve month of -US$93.1m, the US$307m market-cap alleviates its loss by moving closer towards its target of breakeven. As path to profitability is the topic on SOHU’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for SOHU.
Consensus from the 4 Interactive Media and Services analysts is SOHU is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$39m in 2022. SOHU is therefore projected to breakeven around 2 years from today. How fast will SOHU have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 91% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
I’m not going to go through company-specific developments for SOHU given that this is a high-level summary, however, keep in mind 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 I wrap up, there’s one aspect worth mentioning. SOHU has managed its capital prudently, with debt making up 6.0% of equity. This means that SOHU has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
There are too many aspects of SOHU to cover in one brief article, but the key fundamentals for the company can all be found in one place – SOHU’s company page on Simply Wall St. I’ve also put together a list of relevant aspects you should look at:
- Valuation: What is SOHU 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 SOHU 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 Sohu.com’s board and the CEO’s back ground.
- 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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