Is Turbo Energy (NASDAQ:TURB) A Risky Investment?
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.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. We can see that Turbo Energy, S.A. (NASDAQ:TURB) does use debt in its business. But should shareholders be worried about its use of debt?
When Is Debt Dangerous?
Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. 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. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. When we examine debt levels, we first consider both cash and debt levels, together.
What Is Turbo Energy's Debt?
As you can see below, at the end of June 2025, Turbo Energy had €7.96m of debt, up from €2.81m a year ago. Click the image for more detail. On the flip side, it has €1.58m in cash leading to net debt of about €6.38m.
A Look At Turbo Energy's Liabilities
According to the last reported balance sheet, Turbo Energy had liabilities of €8.08m due within 12 months, and liabilities of €2.20m due beyond 12 months. Offsetting this, it had €1.58m in cash and €1.34m in receivables that were due within 12 months. So it has liabilities totalling €7.37m more than its cash and near-term receivables, combined.
This deficit is considerable relative to its market capitalization of €9.17m, so it does suggest shareholders should keep an eye on Turbo Energy's use of debt. This suggests shareholders would be heavily diluted if the company needed to shore up its balance sheet in a hurry. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since Turbo Energy will need earnings to service that debt. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.
Check out our latest analysis for Turbo Energy
In the last year Turbo Energy had a loss before interest and tax, and actually shrunk its revenue by 7.4%, to €10.0m. We would much prefer see growth.
Caveat Emptor
Importantly, Turbo Energy had an earnings before interest and tax (EBIT) loss over the last year. Its EBIT loss was a whopping €2.4m. When we look at that and recall the liabilities on its balance sheet, relative to cash, it seems unwise to us for the company to have any debt. So we think its balance sheet is a little strained, though not beyond repair. However, it doesn't help that it burned through €3.8m of cash over the last year. So suffice it to say we consider the stock very risky. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. Be aware that Turbo Energy is showing 4 warning signs in our investment analysis , and 2 of those don't sit too well with us...
Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.
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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.