Yahoo Finance When Can We Expect A Profit From Zhihu Inc. (NYSE:ZH)?
We feel now is a pretty good time to analyse Zhihu Inc.'s (NYSE:ZH) business as it appears the company may be on the cusp of a considerable accomplishment. Zhihu Inc. operates an online content community in the People’s Republic of China. With the latest financial year loss of CN¥1.5b and a trailing-twelve-month loss of CN¥1.8b, the US$772m market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Zhihu's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
View our latest analysis for Zhihu
Consensus from 13 of the American Interactive Media and Services analysts is that Zhihu is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of CN¥146m in 2025. The company is therefore projected to breakeven around 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 70% 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 Zhihu's growth isn’t the focus of this broad overview, however, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we’d like to point out is that Zhihu has no debt on its balance sheet, which is rare for a loss-making growth company, which typically has high debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of Zhihu to cover in one brief article, but the key fundamentals for the company can all be found in one place – Zhihu's company page on Simply Wall St. We've also compiled a list of key factors you should look at:
Valuation: What is Zhihu 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 Zhihu 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 Zhihu’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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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