With the business potentially at an important milestone, we thought we'd take a closer look at ACV Auctions Inc.'s (NASDAQ:ACVA) future prospects. ACV Auctions Inc. operates a digital marketplace that connects buyers and sellers for the online auction of wholesale vehicles. The company’s loss has recently broadened since it announced a US$75m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$77m, moving it further away from breakeven. Many investors are wondering about the rate at which ACV Auctions will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

According to the 14 industry analysts covering ACV Auctions, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$75m in 2026. The company is therefore projected to breakeven just over a year from today. 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 53% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of ACV Auctions' upcoming projects, though, keep in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 25% of equity. This means that it 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:

This article is not intended to be a comprehensive analysis on ACV Auctions, so if you are interested in understanding the company at a deeper level, take a look at ACV Auctions' company page on Simply Wall St. We've also put together a list of essential factors you should further examine:

1. Valuation: What is ACV Auctions 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 ACV Auctions 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 ACV Auctions’s board and the CEO’s background.
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.

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.