Shareholders in OnTheMarket have been urged to watch the company’s cash burn.
Investment website Simply Wall Street says that OTM ramped up its cash burn “hard and fast”, by 174%.
While this signifies heavy investment in the business, and operating profit was up over the same period, the 11% gain “gives us scant comfort”.
According to OTM when it last reported its balance sheet in July, it had no debt and £8.8m cash. Its cash burn was, in the last year, £15m.
Simply Wall Street says that unless the company – forecast to break even in about 17 months time – reduces its cash burn quickly it may look to raise more money.
With a market valuation of £44m, the £15m cash burn is “notable” – and if the company had to sell shares to cover the cost of another year’s operations, shareholders would suffer some “costly dilution” says the site.
It concludes that OTM’s revenue growth is reassuring but its increasing cash burn “has us a bit worried”.
OnTheMarket shares closed at 72p on Friday, almost half the 140p achieved in February this year.