We feel now is a pretty good time to analyse ACV Auctions Inc.'s (NASDAQ:ACVA) business as it appears the company may be on the cusp of a considerable accomplishment. ACV Auctions Inc. operates a digital marketplace that connects buyers and sellers for the online auction of wholesale vehicles. The US$3.5b market-cap company posted a loss in its most recent financial year of US$75m and a latest trailing-twelve-month loss of US$77m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is ACV Auctions' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

ACV Auctions is bordering on breakeven, according to the 14 American Commercial Services analysts. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$74m in 2026. The company is therefore projected to breakeven around 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 69% year-on-year, on average, 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, take into account that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there's one aspect worth mentioning. 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 compiled a list of relevant factors you should look at:

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.

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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.