We're Hopeful That New Horizon Aircraft (NASDAQ:HOVR) Will Use Its Cash Wisely

We can readily understand why investors are attracted to unprofitable companies. For example, New Horizon Aircraft (NASDAQ:HOVR) shareholders have done very well over the last year, with the share price soaring by 205%. But the harsh reality is that very many loss making companies burn through all their cash and go bankrupt.

In light of its strong share price run, we think now is a good time to investigate how risky New Horizon Aircraft's cash burn is. For the purpose of this article, we'll define cash burn as the amount of cash the company is spending each year to fund its growth (also called its negative free cash flow). First, we'll determine its cash runway by comparing its cash burn with its cash reserves.

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How Long Is New Horizon Aircraft's Cash Runway?

A company's cash runway is calculated by dividing its cash hoard by its cash burn. As at November 2025, New Horizon Aircraft had cash of CA$24m and no debt. In the last year, its cash burn was CA$11m. That means it had a cash runway of about 2.2 years as of November 2025. 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.

View our latest analysis for New Horizon Aircraft

How Is New Horizon Aircraft's Cash Burn Changing Over Time?

New Horizon Aircraft didn't record any revenue over the last year, indicating that it's an early stage company still developing its business. Nonetheless, we can still examine its cash burn trajectory as part of our assessment of its cash burn situation. During the last twelve months, its cash burn actually ramped up 73%. Oftentimes, increased cash burn simply means a company is accelerating its business development, but one should always be mindful that this causes the cash runway to shrink. Clearly, however, the crucial factor is whether the company will grow its business going forward. For that reason, it makes a lot of sense to take a look at our analyst forecasts for the company.

Can New Horizon Aircraft Raise More Cash Easily?

While New Horizon Aircraft does have a solid cash runway, its cash burn trajectory may have some shareholders thinking ahead to when the company may need to raise more cash. Generally speaking, a listed business can raise new cash through issuing shares or taking on debt. 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.

New Horizon Aircraft's cash burn of CA$11m is about 9.7% of its CA$112m 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.

How Risky Is New Horizon Aircraft's Cash Burn Situation?

On this analysis of New Horizon Aircraft's cash burn, we think its cash runway was reassuring, while its increasing cash burn has us a bit worried. Based on the factors mentioned in this article, we think its cash burn situation warrants some attention from shareholders, but we don't think they should be worried. On another note, we conducted an in-depth investigation of the company, and identified 5 warning signs for New Horizon Aircraft (3 don't sit too well with us!) that you should be aware of before investing here.

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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.