Investment Thesis
Kartoon Studios faces existential profitability and cash flow crises with a deeply broken business model generating only 1.4% gross margins while burning $11.6M in annual free cash flow against $39.4M flat revenue. With sub-3-month cash runway at current burn rates and deteriorating financial health indicators, the company lacks sustainable fundamentals for recovery without dramatic operational restructuring.
Strengths
- Zero long-term debt reduces refinancing risk
- Positive stockholders equity of $26.2M provides asset base
- Current ratio above 1.0x indicates minimal immediate liquidity crisis
Risks
- Extreme negative gross margin (1.4%) indicates fundamental business model failure where core operations destroy value
- Operating cash burn of $11.4M annually with only $2.9M cash reserves creates imminent solvency risk
- Net losses of $24.5M on $39.4M revenue with zero revenue growth shows no path to profitability
Key Metrics to Watch
- Operating cash flow trend and cash burn rate relative to cash reserves
- Gross margin and cost structure changes
- Revenue growth rate and evidence of revenue stabilization
Financial Metrics
Revenue
39.4M
Net Income
-24.5M
EPS (Diluted)
$-0.49
Free Cash Flow
-11.6M
Total Assets
70.9M
Cash
2.9M
Profitability Ratios
Gross Margin
1.4%
Operating Margin
-32.8%
Net Margin
-62.3%
ROE
-93.6%
ROA
-34.6%
FCF Margin
-29.4%
Balance Sheet & Liquidity
Current Ratio
1.07x
Quick Ratio
1.07x
Debt/Equity
0.00x
Debt/Assets
61.2%
Interest Coverage
-19.69x
Long-term Debt
0.0
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: 2026-04-17T16:42:20.620973 |
Data as of: 2025-12-31 |
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