Here is a ramp from the Motley Tools today....
Bubs Australia Ltd(ASX: BUB)I became bullish on Bubs earlier this year when it finally became cash flow positive. This appeared to indicate that the infant formula and baby food company had reached an inflection point and the days of dilutive capital raisings were finally over. However, this positive financial performance was only very brief and Bubs was burning through its cash again in the
fourth quarter. Bubs reported an operating cash outflow of $6.9 million for the quarter which, combined with other costs, led to the company burning through $10.3 million of cash. This left it with a cash balance of $26 million.
If it continues to burn through cash at this rate then it will not be long at all until it needs to tap the market with yet another dilutive capital raising. And given how the company has just announced its entry into the children’s vitamins market, I suspect that its cash burn could remain high because of the increased investment. In light of this, although the Bubs share price is down 31% from its high, I wouldn’t be in a rush to invest just yet. I would suggest investors wait for clear signs that the cash burn is over before stepping in.
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