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華爾街日報Would BitFuFu (NASDAQ:FUFU) Be Better Off With Less Debt?
Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We can see that BitFuFu Inc. (NASDAQ:FUFU) does use debt in its business. But is this debt a concern to shareholders?
When Is Debt A Problem?
Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first step when considering a company's debt levels is to consider its cash and debt together.
What Is BitFuFu's Net Debt?
The image below, which you can click on for greater detail, shows that at September 2025 BitFuFu had debt of US$141.3m, up from US$102.4m in one year. However, it does have US$32.6m in cash offsetting this, leading to net debt of about US$108.7m.
A Look At BitFuFu's Liabilities
Zooming in on the latest balance sheet data, we can see that BitFuFu had liabilities of US$164.2m due within 12 months and liabilities of US$118.0m due beyond that. Offsetting this, it had US$32.6m in cash and US$114.5m in receivables that were due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by US$135.1m.
BitFuFu has a market capitalization of US$459.6m, so it could very likely raise cash to ameliorate its balance sheet, if the need arose. However, it is still worthwhile taking a close look at its ability to pay off debt. There's no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if BitFuFu can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.
View our latest analysis for BitFuFu
In the last year BitFuFu wasn't profitable at an EBIT level, but managed to grow its revenue by 4.5%, to US$473m. We usually like to see faster growth from unprofitable companies, but each to their own.
Caveat Emptor
Importantly, BitFuFu had an earnings before interest and tax (EBIT) loss over the last year. To be specific the EBIT loss came in at US$13m. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. However, it doesn't help that it burned through US$233k of cash over the last year. So suffice it to say we do consider the stock to be risky. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet - far from it. To that end, you should be aware of the 2 warning signs we've spotted with BitFuFu .
If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.
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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.