Will HLscience (KOSDAQ:239610) Spend Its Cash Wisely?
We can readily understand why investors are attracted to unprofitable companies. 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 the successes are well known, investors should not ignore the very many unprofitable companies that simply burn through all their cash and collapse.
Given this risk, we thought we'd take a look at whether HLscience (KOSDAQ:239610) shareholders should be worried about its cash burn. In this article, we define cash burn as its annual (negative) free cash flow, which is the amount of money a company spends each year to fund its growth. Let's start with an examination of the business' cash, relative to its cash burn.
When Might HLscience Run Out Of Money?
A company's cash runway is calculated by dividing its cash hoard by its cash burn. When HLscience last reported its June 2026 balance sheet in August 2026, it had zero debt and cash worth ₩24b. In the last year, its cash burn was ₩6.9b. Therefore, from June 2026 it had 3.5 years of cash runway. There's no doubt that this is a reassuringly long runway. Depicted below, you can see how its cash holdings have changed over time.
View our latest analysis for HLscience
How Well Is HLscience Growing?
At first glance it's a bit worrying to see that HLscience actually boosted its cash burn by 38%, year on year. And we must say we find it concerning that operating revenue dropped 42% over the same period. Taken together, we think these growth metrics are a little worrying. Of course, we've only taken a quick look at the stock's growth metrics, here. You can take a look at how HLscience has developed its business over time by checking this visualization of its revenue and earnings history.
How Hard Would It Be For HLscience To Raise More Cash For Growth?
Even though it seems like HLscience is developing its business nicely, we still like to consider how easily it could raise more money to accelerate growth. Issuing new shares, or taking on debt, are the most common ways for a listed company to raise more money for its business. One of the main advantages held by publicly listed companies is that they can sell shares to investors to raise cash and fund 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.
HLscience's cash burn of ₩6.9b is about 23% of its ₩30b market capitalisation. That's fairly notable cash burn, so if the company had to sell shares to cover the cost of another year's operations, shareholders would suffer some costly dilution.
How Risky Is HLscience's Cash Burn Situation?
On this analysis of HLscience's cash burn, we think its cash runway was reassuring, while its falling revenue has us a bit worried. 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. On another note, we conducted an in-depth investigation of the company, and identified 2 warning signs for HLscience (1 shouldn't be ignored!) that you should be aware of before investing here.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies, and this list of stocks growth stocks (according to analyst forecasts)
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