Vulcan Energy Resources (ASX:VUL) Should Proceed with Caution in Driving Business Growth

Vulcan Energy Resources (ASX:VUL) has been making waves in the market, but should shareholders be concerned about its cash burn? The company, which had €79m in cash as of December 2023 and no debt, burned through €117m in the last year. This means it had a cash runway of around 8 months at that time.

Analysts forecast that Vulcan Energy Resources will break even in about 4 years, but with the company ramping up its cash burn by 101% in the last year, investors may be wondering if more cash will be needed soon. With a market capitalization of €582m, the company’s cash burn equates to about 20% of its market value, indicating potential dilution if more shares are issued to fund growth.

While the company’s revenue growth of 112% is impressive, the increasing cash burn does raise some concerns. Analysts are optimistic about Vulcan Energy Resources reaching breakeven, but the risky cash burn situation has some investors feeling nervous about the stock.

Overall, Vulcan Energy Resources may not be the best stock to buy for everyone. Investors are advised to do their own research and consider all factors before making any investment decisions.