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 Salesforce.com lost money for years while it grew recurring revenue, if you held shares since 2005, you'd have done very well indeed. But the harsh reality is that very many loss making companies burn through all their cash and go bankrupt.

So should 908 Devices (NASDAQ:MASS) 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'. Let's start with an examination of the business' cash, relative to its cash burn.

View our latest analysis for 908 Devices

When Might 908 Devices Run Out Of Money?

A company's cash runway is calculated by dividing its cash hoard by its cash burn. When 908 Devices last reported its balance sheet in September 2023, it had zero debt and cash worth US$148m. In the last year, its cash burn was US$31m. That means it had a cash runway of about 4.8 years as of September 2023. A runway of this length affords the company the time and space it needs to develop the business. Depicted below, you can see how its cash holdings have changed over time.

How Well Is 908 Devices Growing?

At first glance it's a bit worrying to see that 908 Devices actually boosted its cash burn by 15%, year on year. And we must say we find it concerning that operating revenue dropped 6.9% over the same period. Considering both these factors, we're not particularly excited by its growth profile. 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.

How Easily Can 908 Devices Raise Cash?

Even though it seems like 908 Devices is developing its business nicely, we still like to consider how easily it could raise more money to accelerate 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).

908 Devices has a market capitalisation of US$225m and burnt through US$31m last year, which is 14% of the company's market value. As a result, we'd venture that the company could raise more cash for growth without much trouble, albeit at the cost of some dilution.