Simply Wall St

Here’s Why We’re Not Overly Concerned About ReWalk Robotics’ (NASDAQ:RWLK) Money Burn Status

We can easily understand why investors are attracted to unprofitable companies. For example, even though incurred losses for many years after listing, if you had bought the stock and held it since 1999, it would be a fortune. However, only a fool would ignore the danger that a losing company will burn its money too quickly.

so it should ReWalk Robotics (NASDAQ: RWLK) Are Shareholders Concerned About Burning Cash? For the purpose of this article, we will define cash burn as the amount of cash a company spends each year to finance its growth (also called negative free cash flow). Let’s start by examining the company’s cash for its cash burn.

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Does ReWalk Robotics Have a Long Cash Track?

A company’s cash runway is calculated by dividing its cash stock by its cash burn. When ReWalk Robotics last reported its balance sheet in June 2022, it had no debt and cash of $79 million. Looking at the last year, the company’s profit was $15 million. So it had a cash runway of about 5.4 years as of June 2022. While this is only one measure of the state of the money burning, it certainly gives us the impression that there is nothing to worry about. You can see how her cash balance has changed over time in the image below.

NasdaqCM: Debt-to-Equity History RWLK October 4, 2022

How big are ReWalk bots growing?

At first glance, it’s a little disconcerting to see that ReWalk Robotics has actually boosted its cash burn by 27%, year over year. At least revenue is up 20% over this period, even if it isn’t much high. Given the factors mentioned above, the company’s performance isn’t bad when it comes to assessing how it has changed over time. Obviously, the deciding factor is whether the company will grow its business in the future. So you might want to take a peek at how much the company is expected to grow in the next few years.

How difficult is it for ReWalk bots to raise more money for growth?

There’s no doubt that ReWalk Robotics seems to be in fairly good shape, when it comes to managing its cash burn, but even if it’s only hypothetical, it’s always worth questioning how easy it is to raise more money to fund growth. Issuing new shares or borrowing is one of the most common ways for a listed company to raise more money for its business. One of the main advantages that publicly listed companies have is that they can sell shares to investors to increase liquidity and grow money. We can compare a company’s cash burn to its market value to see how many new shares the company will have to issue to fund one year’s operations.

ReWalk Robotics’ $15 million cash burn is approximately 25% of its $57 million market capitalization. That’s no small feat, and if the company has to sell enough shares to fund another year’s growth at the current share price, it will likely see rather costly dilution.

So, should we worry about ReWalk Robotics’ cash burn?

Although the increased cash burn makes us feel a bit nervous, we do have to mention that we thought ReWalk Robotics’ cash runway was relatively promising. While we’re the type of investor who always cares a little bit about the risks involved in burning money companies, the metrics we’ve discussed in this article make us relatively comfortable with ReWalk Robotics’ position. Readers need to have a good understanding of business risks before investing in stocks, and we spotted it 2 Warning Signs for ReWalk Robotics Potential shareholders should take it into consideration before putting money into stocks.

naturally, You may find a great investment by looking elsewhere. So take a peek at this Free A list of interesting companies, this list of stock growth stocks (according to analyst forecasts)

This article by Simply Wall St is general in nature. We provide comments based only on historical data and analyst expectations using an unbiased methodology and our articles are not intended as financial advice. It does not constitute a recommendation to buy or sell any stock, nor does it take into account your objectives or financial situation. We aim to provide you with focused, long-term analysis driven by essential data. Note that our analysis may not include the company’s most recent price-sensitive ads or quality materials. Wall Street simply has no position in any of the stocks mentioned.

Evaluation is complex, but we help simplify it.

Find out if ReWalk Robotics potentially overvalued or undervalued by checking out our comprehensive analysis, which includes Fair value estimates, risks, warnings, dividends, insider transactions and financial soundness.

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