Investment Thesis
LM Funding America is in severe financial distress with unsustainable cash burn of $16.2M annually against only $1.4M in cash reserves. The company is burning cash operationally, posting massive losses (-$26.9M net income), and experiencing declining revenue (-19.6% YoY), indicating fundamental business deterioration with no clear path to profitability.
Strengths
- Moderate debt/equity ratio of 0.66x limits leverage risk relative to peer distressed situations
- Current ratio of 1.18x provides minimal near-term liquidity buffer
- Losses improving slightly YoY (EPS -3.28 vs worse prior year), though absolute loss amounts remain catastrophic
Risks
- Unsustainable cash burn trajectory: depletes $1.4M cash position in ~6 weeks at current operating cash flow burn rate
- Revenue declining 19.6% YoY indicates core business deterioration and inability to generate positive top-line growth
- Unable to cover debt service from operations: negative interest coverage of -20.3x and negative operating cash flow of -$14M
- Massive profitability destruction: -304.4% net margin and -258.7% operating margin signal broken business model
- ROA of -52.9% and ROE of -87.9% demonstrate severe shareholder value destruction
Key Metrics to Watch
- Cash balance and runway to insolvency
- Revenue stabilization and path to positive operating cash flow
- Operating margin improvement trajectory and timeline to profitability
- Debt covenant compliance and refinancing risk
Financial Metrics
Revenue
8.8M
Net Income
-26.9M
EPS (Diluted)
$-3.28
Free Cash Flow
-16.2M
Total Assets
51.3M
Cash
1.4M
Profitability Ratios
Gross Margin
N/A
Operating Margin
-258.7%
Net Margin
-304.4%
ROE
-87.9%
ROA
-52.5%
FCF Margin
-183.1%
Balance Sheet & Liquidity
Current Ratio
1.18x
Quick Ratio
1.18x
Debt/Equity
0.66x
Debt/Assets
43.7%
Interest Coverage
-20.35x
Long-term Debt
20.1M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-04-12T16:51:21.398927 |
Data as of: 2025-12-31 |
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