Nexalin Technology (NASDAQ:NXL) has experienced a significant 917% rise in share price over the last year, showcasing the potential for profits in unprofitable businesses. However, investors are urged to be cautious as many such companies often burn through cash and collapse. Despite the impressive share price increase, concerns are raised over Nexalin Technology’s cash burn rate.
As of September 2024, the company had zero debt and $4.6 million in cash reserves, with a cash runway of approximately 14 months based on its current spending rate. While the flat cash burn rate indicates steady spending, the company’s minimal operating revenue of $162k in the last twelve months raises questions about future growth prospects.
Although Nexalin Technology has reduced its cash burn recently, shareholders should consider the ease of the company raising more cash in the future, potentially through issuing new shares or taking on debt. The company’s current cash burn rate is only 7.1% of its market capitalization, suggesting it could easily fund future operations through issuing new shares.
While the company’s cash burn situation seems optimistic, investors are advised to be cautious and consider the potential risks involved. Nexalin Technology has been flagged for 5 warning signs, emphasizing the need for thorough analysis before making investment decisions. This article provides a detailed overview of the company’s financial situation, valuations, and potential growth prospects to help investors make informed choices.
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