Running at a loss can be a red flag. Many of these businesses face mounting challenges as competition increases and funding becomes harder to secure.

Finding the right unprofitable companies is difficult, which is why we started StockStory - to help you navigate the market. Keeping that in mind, here are three unprofitable companiesto avoid and some better opportunities instead.

Mobileye (MBLY)

Trailing 12-Month GAAP Operating Margin: -209%

With its EyeQ chips installed in over 200 million vehicles worldwide, Mobileye (NASDAQ: MBLY) develops advanced driver assistance systems and autonomous driving technologies that help vehicles detect and respond to road conditions.

Why Do We Avoid MBLY?

1. Muted 4.1% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
2. Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 18.4% annually
3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

Mobileye is trading at $9.21 per share, or 39.5x forward P/E. Dive into our free research report to see why there are better opportunities than MBLY.

Transocean (RIG)

Trailing 12-Month GAAP Operating Margin: -51.1%

Operating one of the world's most capable fleets of ultra-deepwater drillships and harsh environment rigs, Transocean (NYSE: RIG) operates drilling rigs that energy companies rent to drill oil and gas wells in deep ocean waters.

Why Do We Think RIG Will Underperform?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 4.4% annually over the last ten years
2. Gross margin of 37.3% is below its competitors, leaving less money to invest in exploration and production
3. Low free cash flow margin of 4.7% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders

At $6.41 per share, Transocean trades at 35.6x forward P/E. Read our free research report to see why you should think twice about including RIG in your portfolio.

ProFrac (ACDC)

Trailing 12-Month GAAP Operating Margin: -16.1%

Operating one of the largest electric-powered fracturing fleets in North America, ProFrac (NASDAQ: ACDC) provides hydraulic fracturing services that help oil and gas companies extract hydrocarbons from underground shale formations.

Why Are We Cautious About ACDC?

1. Costly operations and weak unit economics result in an inferior gross margin of 32.5% that must be offset through higher production volumes
2. Costs have risen faster than its revenue over the last five years, causing its EBITDA margin to decline by 8.1 percentage points
3. Poor free cash flow margin of 3.9% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends

ProFrac’s stock price of $6.61 implies a valuation ratio of 0.7x forward price-to-sales. To fully understand why you should be careful with ACDC, check out our full research report (it’s free).

Stocks We Like More

WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.

But our AI platform says the party isn't over. Find out which 9 stocks made the cut this week - FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.