We can readily understand why investors are attracted to unprofitable companies. Indeed, Western Uranium & Vanadium ( CSE:WUC ) stock is up 341% in the last year, providing strong gains for shareholders. But while history lauds those rare successes, those that fail are often forgotten; who remembers Pets.com?
So notwithstanding the buoyant share price, we think it’s well worth asking whether Western Uranium & Vanadium’s cash burn is too risky. For the purposes of this article, cash burn is the annual rate at which an unprofitable company spends cash to fund its growth; its negative free cash flow. Let’s start with an examination of the business’ cash, relative to its cash burn. How Long Is Western Uranium & Vanadium’s Cash Runway?
A company’s cash runway is calculated by dividing its cash hoard by its cash burn. In June 2021, Western Uranium & Vanadium had US$5.3m in cash, and was […]
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