With the business potentially at an important milestone, we thought we'd take a closer look at REE Automotive Ltd.'s (NASDAQ:REE) future prospects. REE Automotive Ltd. operates as an automotive technology company in France, the United Kingdom, the United States, and internationally. With the latest financial year loss of US$114m and a trailing-twelve-month loss of US$110m, the US$146m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on REE Automotive's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for REE Automotive

REE Automotive is bordering on breakeven, according to the 2 American Auto Components analysts. They anticipate the company to incur a final loss in 2026, before generating positive profits of US$6.0m in 2027. Therefore, the company is expected to breakeven roughly 2 years 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 58% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for REE Automotive given that this is a high-level summary, though, bear 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 would like to bring into light with REE Automotive is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in REE Automotive's case is 43%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of REE Automotive to cover in one brief article, but the key fundamentals for the company can all be found in one place – REE Automotive's company page on Simply Wall St. We've also compiled a list of key factors you should look at:

1. Historical Track Record: What has REE Automotive's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on REE Automotive'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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.