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Yahoo
2 days ago
- Business
- Yahoo
Tech guru Erik Gordon says investors will 'suffer' far more from the AI boom than the dot-com crash
The AI boom will go bust and dwarf the dot-com crash because of its greater scale, Erik Gordon said. AI startups such as CoreWeave threaten greater investor losses than the likes of he said. The business professor has previously warned that AI is an "order-of-magnitude overvaluation bubble." A company's stock plunge shows how the financial fallout of the AI boom stalling will be much greater than the dot-com bust, tech guru Erik Gordon told Business Insider. Gordon, an entrepreneurship professor who researches financial markets and technology at the University of Michigan's Ross School of Business, has previously called the AI boom an "order-of-magnitude overvaluation bubble." Some investors have said tech stocks surging on AI bullishness will crash like dot-com companies in the early 2000s, but others, such as Kevin O'Leary, have dismissed the comparison. Gordon contrasted the market values of the online pet-supplies retailer that became what he called the "poster bozo" of dot-com mania, and CoreWeave, an AI infrastructure startup that went public in March. Nvidia-backed CoreWeave's shares have fallen 33% over the last two days, wiping about $24 billion from its market cap, showing how "more investors will suffer than suffered in the dot-com crash, and their suffering will be more painful" in a bursting AI bubble, Gordon said. The fall came after the company's latest earnings showed widening losses and infrastructure constraints. backed by Amazon and several renowned VC firms, secured a market value of $410 million at its peak in February 2000. But within the next 12 months, the company declared bankruptcy and said it would liquidate its assets, and its stock was delisted. "If you assume all $410 million was lost, the loss was tiny compared to what we might see in AI," Gordon said. CoreWeave shows how sudden and significant losses can be for shareholders, Gordon said. The loss to its market cap is almost 60 times peak market cap. CoreWeave stock still closed at around $100 a share on Thursday, more than double its listing price of $40. "It takes a hype-driven tech stock to instantly destroy $20 billion in wealth," Gordon said. CoreWeave didn't immediately respond to a request for comment from Business Insider. CEO Michael Intrator said in a statement accompanying the earnings that they showed "continued momentum across every dimension of our business." The collapse of the dot-com bubble saw the S&P, including dividends, drop by around 9% in 2000, 12% in 2001, then 22% in 2002. Scores of startups filed for bankruptcy, and thousands of tech workers lost their jobs. Tech titans make up a large chunk of the US stock market's value, and their profits and market dominance have made them mainstays of retirement portfolios and pension funds. In 2022, Gordon told Business Insider that more people were invested in AI than in dot-com companies 25 years ago. He predicted there would be "more bowls of spaghetti" after the AI boom burst, as people who got burned by the slump would cook at home to save money and cut costs wherever possible. Speaking to Business Insider last week, O'Leary said the AI boom wasn't the "same hype that the internet bubble was, because today, you actually can see the productivity and measure it on a dollar-by-dollar basis." Read the original article on Business Insider
Yahoo
4 days ago
- Business
- Yahoo
We Think Chalice Mining (ASX:CHN) Can Easily Afford To Drive Business Growth
Explore Chalice Mining's Fair Values from the Community and select yours Just because a business does not make any money, does not mean that the stock will go down. For example, although software-as-a-service business lost money for years while it grew recurring revenue, if you held shares since 2005, you'd have done very well indeed. But while history lauds those rare successes, those that fail are often forgotten; who remembers Given this risk, we thought we'd take a look at whether Chalice Mining (ASX:CHN) shareholders should be worried about its cash burn. In this article, we define cash burn as its annual (negative) free cash flow, which is the amount of money a company spends each year to fund its growth. Let's start with an examination of the business' cash, relative to its cash burn. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. How Long Is Chalice Mining's Cash Runway? A cash runway is defined as the length of time it would take a company to run out of money if it kept spending at its current rate of cash burn. In December 2024, Chalice Mining had AU$90m in cash, and was debt-free. Importantly, its cash burn was AU$24m over the trailing twelve months. That means it had a cash runway of about 3.7 years as of December 2024. Importantly, analysts think that Chalice Mining will reach cashflow breakeven in 5 years. Essentially, that means the company will either reduce its cash burn, or else require more cash. You can see how its cash balance has changed over time in the image below. Check out our latest analysis for Chalice Mining How Is Chalice Mining's Cash Burn Changing Over Time? Whilst it's great to see that Chalice Mining has already begun generating revenue from operations, last year it only produced AU$446k, so we don't think it is generating significant revenue, at this point. As a result, we think it's a bit early to focus on the revenue growth, so we'll limit ourselves to looking at how the cash burn is changing over time. Notably, its cash burn was actually down by 60% in the last year, which is a real positive in terms of resilience, but uninspiring when it comes to investment for growth. Clearly, however, the crucial factor is whether the company will grow its business going forward. For that reason, it makes a lot of sense to take a look at our analyst forecasts for the company. Can Chalice Mining Raise More Cash Easily? While we're comforted by the recent reduction evident from our analysis of Chalice Mining's cash burn, it is still worth considering how easily the company could raise more funds, if it wanted to accelerate spending to drive growth. Issuing new shares, or taking on debt, are the most common ways for a listed company to raise more money for its business. Commonly, a business will sell new shares in itself to raise cash and drive growth. By comparing a company's annual cash burn to its total market capitalisation, we can estimate roughly how many shares it would have to issue in order to run the company for another year (at the same burn rate). Since it has a market capitalisation of AU$656m, Chalice Mining's AU$24m in cash burn equates to about 3.7% of its market value. Given that is a rather small percentage, it would probably be really easy for the company to fund another year's growth by issuing some new shares to investors, or even by taking out a loan. How Risky Is Chalice Mining's Cash Burn Situation? As you can probably tell by now, we're not too worried about Chalice Mining's cash burn. For example, we think its cash runway suggests that the company is on a good path. And even its cash burn reduction was very encouraging. Shareholders can take heart from the fact that analysts are forecasting it will reach breakeven. Taking all the factors in this report into account, we're not at all worried about its cash burn, as the business appears well capitalized to spend as needs be. On another note, Chalice Mining has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about. Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies with significant insider holdings, and this list of stocks growth stocks (according to analyst forecasts) Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) 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.
Yahoo
06-08-2025
- Business
- Yahoo
We're Not Very Worried About Rhythm Biosciences' (ASX:RHY) Cash Burn Rate
Explore Rhythm Biosciences's Fair Values from the Community and select yours Just because a business does not make any money, does not mean that the stock will go down. Indeed, Rhythm Biosciences (ASX:RHY) stock is up 181% in the last year, providing strong gains for shareholders. But while history lauds those rare successes, those that fail are often forgotten; who remembers Given its strong share price performance, we think it's worthwhile for Rhythm Biosciences shareholders to consider whether its cash burn is concerning. For the purpose of this article, we'll define cash burn as the amount of cash the company is spending each year to fund its growth (also called its negative free cash flow). We'll start by comparing its cash burn with its cash reserves in order to calculate its cash runway. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. Does Rhythm Biosciences Have A Long Cash Runway? A company's cash runway is the amount of time it would take to burn through its cash reserves at its current cash burn rate. As at December 2024, Rhythm Biosciences had cash of AU$4.5m and no debt. In the last year, its cash burn was AU$2.1m. That means it had a cash runway of about 2.1 years as of December 2024. That's decent, giving the company a couple years to develop its business. You can see how its cash balance has changed over time in the image below. Check out our latest analysis for Rhythm Biosciences How Is Rhythm Biosciences' Cash Burn Changing Over Time? In the last year, Rhythm Biosciences did book revenue of AU$3.2m, but its revenue from operations was less, at just AU$1.5m. Given how low that operating leverage is, we think it's too early to put much weight on the revenue growth, so we'll focus on how the cash burn is changing, instead. Notably, its cash burn was actually down by 75% in the last year, which is a real positive in terms of resilience, but uninspiring when it comes to investment for growth. Admittedly, we're a bit cautious of Rhythm Biosciences due to its lack of significant operating revenues. So we'd generally prefer stocks from this list of stocks that have analysts forecasting growth. How Hard Would It Be For Rhythm Biosciences To Raise More Cash For Growth? While we're comforted by the recent reduction evident from our analysis of Rhythm Biosciences' cash burn, it is still worth considering how easily the company could raise more funds, if it wanted to accelerate spending to drive growth. Companies can raise capital through either debt or equity. Many companies end up issuing new shares to fund future growth. By comparing a company's annual cash burn to its total market capitalisation, we can estimate roughly how many shares it would have to issue in order to run the company for another year (at the same burn rate). Rhythm Biosciences' cash burn of AU$2.1m is about 2.8% of its AU$77m market capitalisation. So it could almost certainly just borrow a little to fund another year's growth, or else easily raise the cash by issuing a few shares. How Risky Is Rhythm Biosciences' Cash Burn Situation? It may already be apparent to you that we're relatively comfortable with the way Rhythm Biosciences is burning through its cash. For example, we think its cash burn reduction suggests that the company is on a good path. And even its cash runway was very encouraging. After taking into account the various metrics mentioned in this report, we're pretty comfortable with how the company is spending its cash. Separately, we looked at different risks affecting the company and spotted 6 warning signs for Rhythm Biosciences (of which 2 are a bit concerning!) you should know about. Of course Rhythm Biosciences may not be the best stock to buy. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) 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. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
06-08-2025
- Business
- Yahoo
We're Keeping An Eye On First Tin's (LON:1SN) Cash Burn Rate
There's no doubt that money can be made by owning shares of unprofitable businesses. For example, although made losses for many years after listing, if you had bought and held the shares since 1999, you would have made a fortune. But while history lauds those rare successes, those that fail are often forgotten; who remembers So should First Tin (LON:1SN) shareholders be worried about its cash burn? In this report, we will consider the company's annual negative free cash flow, henceforth referring to it as the 'cash burn'. We'll start by comparing its cash burn with its cash reserves in order to calculate its cash runway. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. Does First Tin Have A Long Cash Runway? A company's cash runway is the amount of time it would take to burn through its cash reserves at its current cash burn rate. In December 2024, First Tin had UK£8.4m in cash, and was debt-free. Looking at the last year, the company burnt through UK£7.4m. So it had a cash runway of approximately 14 months from December 2024. While that cash runway isn't too concerning, sensible holders would be peering into the distance, and considering what happens if the company runs out of cash. Importantly, if we extrapolate recent cash burn trends, the cash runway would be noticeably longer. Depicted below, you can see how its cash holdings have changed over time. Check out our latest analysis for First Tin How Is First Tin's Cash Burn Changing Over Time? First Tin didn't record any revenue over the last year, indicating that it's an early stage company still developing its business. Nonetheless, we can still examine its cash burn trajectory as part of our assessment of its cash burn situation. While it hardly paints a picture of imminent growth, the fact that it has reduced its cash burn by 21% over the last year suggests some degree of prudence. Admittedly, we're a bit cautious of First Tin due to its lack of significant operating revenues. So we'd generally prefer stocks from this list of stocks that have analysts forecasting growth. Can First Tin Raise More Cash Easily? While First Tin is showing a solid reduction in its cash burn, it's still worth considering how easily it could raise more cash, even just to fuel faster growth. Issuing new shares, or taking on debt, are the most common ways for a listed company to raise more money for its business. Commonly, a business will sell new shares in itself to raise cash and drive growth. By looking at a company's cash burn relative to its market capitalisation, we gain insight on how much shareholders would be diluted if the company needed to raise enough cash to cover another year's cash burn. First Tin has a market capitalisation of UK£26m and burnt through UK£7.4m last year, which is 28% of the company's market value. That's fairly notable cash burn, so if the company had to sell shares to cover the cost of another year's operations, shareholders would suffer some costly dilution. How Risky Is First Tin's Cash Burn Situation? Even though its cash burn relative to its market cap makes us a little nervous, we are compelled to mention that we thought First Tin's cash burn reduction was relatively promising. Even though we don't think it has a problem with its cash burn, the analysis we've done in this article does suggest that shareholders should give some careful thought to the potential cost of raising more money in the future. Taking a deeper dive, we've spotted 4 warning signs for First Tin you should be aware of, and 3 of them are potentially serious. Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies with significant insider holdings, and this list of stocks growth stocks (according to analyst forecasts) Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) 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. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
26-07-2025
- Business
- Yahoo
King Copper Discovery (CVE:KCP) Is In A Good Position To Deliver On Growth Plans
There's no doubt that money can be made by owning shares of unprofitable businesses. Indeed, King Copper Discovery (CVE:KCP) stock is up 133% in the last year, providing strong gains for shareholders. But while history lauds those rare successes, those that fail are often forgotten; who remembers So notwithstanding the buoyant share price, we think it's well worth asking whether King Copper Discovery's cash burn is too risky. In this report, we will consider the company's annual negative free cash flow, henceforth referring to it as the 'cash burn'. The first step is to compare its cash burn with its cash reserves, to give us its 'cash runway'. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. How Long Is King Copper Discovery's Cash Runway? A company's cash runway is the amount of time it would take to burn through its cash reserves at its current cash burn rate. As at March 2025, King Copper Discovery had cash of CA$2.9m and no debt. In the last year, its cash burn was CA$2.5m. That means it had a cash runway of around 14 months as of March 2025. While that cash runway isn't too concerning, sensible holders would be peering into the distance, and considering what happens if the company runs out of cash. The image below shows how its cash balance has been changing over the last few years. See our latest analysis for King Copper Discovery How Is King Copper Discovery's Cash Burn Changing Over Time? King Copper Discovery didn't record any revenue over the last year, indicating that it's an early stage company still developing its business. Nonetheless, we can still examine its cash burn trajectory as part of our assessment of its cash burn situation. While it hardly paints a picture of imminent growth, the fact that it has reduced its cash burn by 44% over the last year suggests some degree of prudence. King Copper Discovery makes us a little nervous due to its lack of substantial operating revenue. So we'd generally prefer stocks from this list of stocks that have analysts forecasting growth. How Easily Can King Copper Discovery Raise Cash? While King Copper Discovery is showing a solid reduction in its cash burn, it's still worth considering how easily it could raise more cash, even just to fuel faster growth. Companies can raise capital through either debt or equity. Commonly, a business will sell new shares in itself to raise cash and drive growth. By looking at a company's cash burn relative to its market capitalisation, we gain insight on how much shareholders would be diluted if the company needed to raise enough cash to cover another year's cash burn. King Copper Discovery's cash burn of CA$2.5m is about 5.5% of its CA$46m market capitalisation. That's a low proportion, so we figure the company would be able to raise more cash to fund growth, with a little dilution, or even to simply borrow some money. How Risky Is King Copper Discovery's Cash Burn Situation? The good news is that in our view King Copper Discovery's cash burn situation gives shareholders real reason for optimism. Not only was its cash burn reduction quite good, but its cash burn relative to its market cap was a real positive. Cash burning companies are always on the riskier side of things, but after considering all of the factors discussed in this short piece, we're not too worried about its rate of cash burn. Taking a deeper dive, we've spotted 5 warning signs for King Copper Discovery you should be aware of, and 3 of them make us uncomfortable. Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies, and this list of stocks growth stocks (according to analyst forecasts) Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) 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. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
