Is Amprius Technologies (NYSE:AMPX) In A Good Position To Invest In Growth?

Amprius Technologies, Inc. Common Stock 0.00%

Amprius Technologies, Inc. Common Stock




We can readily understand why investors are attracted to unprofitable companies. For example, biotech and mining exploration companies often lose money for years before finding success with a new treatment or mineral discovery. But the harsh reality is that very many loss making companies burn through all their cash and go bankrupt.

So should Amprius Technologies (NYSE:AMPX) shareholders be worried about its cash burn? In this report, we will consider the company's annual negative free cash flow, henceforth referring to it as the 'cash burn'. Let's start with an examination of the business' cash, relative to its cash burn.

View our latest analysis for Amprius Technologies

Does Amprius Technologies Have A Long Cash Runway?

A company's cash runway is the amount of time it would take to burn through its cash reserves at its current cash burn rate. When Amprius Technologies last reported its December 2023 balance sheet in March 2024, it had zero debt and cash worth US$46m. Looking at the last year, the company burnt through US$43m. So it had a cash runway of approximately 13 months from December 2023. While that cash runway isn't too concerning, sensible holders would be peering into the distance, and considering what happens if the company runs out of cash. The image below shows how its cash balance has been changing over the last few years.

NYSE:AMPX Debt to Equity History March 29th 2024

How Well Is Amprius Technologies Growing?

Notably, Amprius Technologies actually ramped up its cash burn very hard and fast in the last year, by 181%, signifying heavy investment in the business. It seems likely that the vociferous operating revenue growth of 105% during that time may well have given management confidence to ramp investment. In light of the data above, we're fairly sanguine about the business growth trajectory. While the past is always worth studying, it is the future that matters most of all. For that reason, it makes a lot of sense to take a look at our analyst forecasts for the company.

How Easily Can Amprius Technologies Raise Cash?

Even though it seems like Amprius Technologies is developing its business nicely, we still like to consider how easily it could raise more money to accelerate growth. Companies can raise capital through either debt or equity. One of the main advantages held by publicly listed companies is that they can sell shares to investors to raise cash and fund growth. By comparing a company's annual cash burn to its total market capitalisation, we can estimate roughly how many shares it would have to issue in order to run the company for another year (at the same burn rate).

Since it has a market capitalisation of US$235m, Amprius Technologies' US$43m in cash burn equates to about 18% of its market value. Given that situation, it's fair to say the company wouldn't have much trouble raising more cash for growth, but shareholders would be somewhat diluted.

So, Should We Worry About Amprius Technologies' Cash Burn?

Even though its increasing cash burn makes us a little nervous, we are compelled to mention that we thought Amprius Technologies' revenue growth was relatively promising. We don't think its cash burn is particularly problematic, but after considering the range of factors in this article, we do think shareholders should be monitoring how it changes over time. On another note, we conducted an in-depth investigation of the company, and identified 3 warning signs for Amprius Technologies (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

Of course Amprius Technologies may not be the best stock to buy. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

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