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We're Hopeful That Beyond Oil (TSE:BOIL) Will Use Its Cash Wisely

Simply Wall St · 1d ago

There's no doubt that money can be made by owning shares of unprofitable businesses. 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 while history lauds those rare successes, those that fail are often forgotten; who remembers Pets.com?

So, the natural question for Beyond Oil (TSE:BOIL) shareholders is whether they should be concerned by its rate of cash burn. For the purposes of this article, cash burn is the annual rate at which an unprofitable company spends cash to fund its growth; its negative free cash flow. We'll start by comparing its cash burn with its cash reserves in order to calculate its cash runway.

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When Might Beyond Oil Run Out Of Money?

A company's cash runway is calculated by dividing its cash hoard by its cash burn. In September 2025, Beyond Oil had US$11m in cash, and was debt-free. In the last year, its cash burn was US$7.0m. Therefore, from September 2025 it had roughly 18 months of cash runway. While that cash runway isn't too concerning, sensible holders would be peering into the distance, and considering what happens if the company runs out of cash. The image below shows how its cash balance has been changing over the last few years.

debt-equity-history-analysis
TSX:BOIL Debt to Equity History December 16th 2025

Check out our latest analysis for Beyond Oil

How Is Beyond Oil's Cash Burn Changing Over Time?

Whilst it's great to see that Beyond Oil has already begun generating revenue from operations, last year it only produced US$3.6m, so we don't think it is generating significant revenue, at this point. As a result, we think it's a bit early to focus on the revenue growth, so we'll limit ourselves to looking at how the cash burn is changing over time. In fact, it ramped its spending strongly over the last year, increasing cash burn by 150%. It's fair to say that sort of rate of increase cannot be maintained for very long, without putting pressure on the balance sheet. Of course, we've only taken a quick look at the stock's growth metrics, here. This graph of historic revenue growth shows how Beyond Oil is building its business over time.

How Easily Can Beyond Oil Raise Cash?

Given its cash burn trajectory, Beyond Oil shareholders may wish to consider how easily it could raise more cash, despite its solid cash runway. Generally speaking, a listed business can raise new cash through issuing shares or taking on debt. Commonly, a business will sell new shares in itself to raise cash and drive growth. We can compare a company's cash burn to its market capitalisation to get a sense for how many new shares a company would have to issue to fund one year's operations.

Beyond Oil has a market capitalisation of US$147m and burnt through US$7.0m last year, which is 4.8% of the company's market value. Given that is a rather small percentage, it would probably be really easy for the company to fund another year's growth by issuing some new shares to investors, or even by taking out a loan.

Is Beyond Oil's Cash Burn A Worry?

Even though its increasing cash burn makes us a little nervous, we are compelled to mention that we thought Beyond Oil's cash burn relative to its market cap was relatively promising. Cash burning companies are always on the riskier side of things, but after considering all of the factors discussed in this short piece, we're not too worried about its rate of cash burn. Taking a deeper dive, we've spotted 3 warning signs for Beyond Oil you should be aware of, and 1 of them is a bit concerning.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies with significant insider holdings, and this list of stocks growth stocks (according to analyst forecasts)