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Companies Like NEXON Games (KOSDAQ:225570) Are In A Position To Invest In Growth

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 the harsh reality is that very many loss making companies burn through all their cash and go bankrupt.

Given this risk, we thought we'd take a look at whether NEXON Games (KOSDAQ:225570) shareholders should be worried about its cash burn. In this report, we will consider the company's annual negative free cash flow, henceforth referring to it as the 'cash burn'. Let's start with an examination of the business' cash, relative to its cash burn.

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How Long Is NEXON Games' Cash Runway?

A company's cash runway is the amount of time it would take to burn through its cash reserves at its current cash burn rate. As at June 2026, NEXON Games had cash of ₩135b and no debt. Looking at the last year, the company burnt through ₩64b. Therefore, from June 2026 it had 2.1 years of cash runway. Arguably, that's a prudent and sensible length of runway to have. The image below shows how its cash balance has been changing over the last few years.

debt-equity-history-analysis
KOSDAQ:A225570 Debt to Equity History August 25th 2026

View our latest analysis for NEXON Games

Is NEXON Games' Revenue Growing?

We're hesitant to extrapolate on the recent trend to assess its cash burn, because NEXON Games actually had positive free cash flow last year, so operating revenue growth is probably our best bet to measure, right now. Unfortunately, the last year has been a disappointment, with operating revenue dropping 31% during the period. While the past is always worth studying, it is the future that matters most of all. For that reason, it makes a lot of sense to take a look at our analyst forecasts for the company.

How Easily Can NEXON Games Raise Cash?

Since its revenue growth is moving in the wrong direction, NEXON Games shareholders may wish to think ahead to when the company may need to raise more cash. Issuing new shares, or taking on debt, are the most common ways for a listed company to raise more money for its business. Commonly, a business will sell new shares in itself to raise cash and drive growth. By looking at a company's cash burn relative to its market capitalisation, we gain insight on how much shareholders would be diluted if the company needed to raise enough cash to cover another year's cash burn.

NEXON Games' cash burn of ₩64b is about 9.5% of its ₩674b market capitalisation. That's a low proportion, so we figure the company would be able to raise more cash to fund growth, with a little dilution, or even to simply borrow some money.

Is NEXON Games' Cash Burn A Worry?

Even though its falling revenue makes us a little nervous, we are compelled to mention that we thought NEXON Games' cash runway 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. Its important for readers to be cognizant of the risks that can affect the company's operations, and we've picked out 1 warning sign for NEXON Games that investors should know when investing in the stock.

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