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 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 UTStarcom Holdings (NASDAQ:UTSI) shareholders should be worried about its 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. First, we’ll determine its cash runway by comparing its cash burn with its cash reserves.
When Might UTStarcom Holdings Run Out Of Money?
A company’s cash runway is calculated by dividing its cash hoard by its cash burn. In December 2025, UTStarcom Holdings had US$34m in cash, and was debt-free. In the last year, its cash burn was US$9.2m. Therefore, from December 2025 it had 3.7 years of cash runway. There’s no doubt that this is a reassuringly long runway. You can see how its cash balance has changed over time in the image below.
View our latest analysis for UTStarcom Holdings
How Well Is UTStarcom Holdings Growing?
Notably, UTStarcom Holdings actually ramped up its cash burn very hard and fast in the last year, by 100%, signifying heavy investment in the business. While that’s concerning on it’s own, the fact that operating revenue was actually down 17% over the same period makes us positively tremulous. 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 UTStarcom Holdings has developed its business over time by checking this visualization of its revenue and earnings history.
How Hard Would It Be For UTStarcom Holdings To Raise More Cash For Growth?
Even though it seems like UTStarcom Holdings is developing its business nicely, we still like to consider how easily it could raise more money to accelerate growth. 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.
UTStarcom Holdings’ cash burn of US$9.2m is about 39% of its US$24m market capitalisation. That’s not insignificant, and if the company had to sell enough shares to fund another year’s growth at the current share price, you’d likely witness fairly costly dilution.
Is UTStarcom Holdings’ Cash Burn A Worry?
Even though its increasing cash burn makes us a little nervous, we are compelled to mention that we thought UTStarcom Holdings’ cash runway was relatively promising. We don’t think its cash burn is particularly problematic, but after considering the range of factors in this article, we do think shareholders should be monitoring how it changes over time. Readers need to have a sound understanding of business risks before investing in a stock, and we’ve spotted 1 warning sign for UTStarcom Holdings that potential shareholders should take into account before putting money into a stock.
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)
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.