Unprofitable companies can burn through cash quickly, leaving investors exposed if they fail to turn things around. Without a clear path to profitability, these businesses risk running out of capital or relying on dilutive fundraising.

Unprofitable companies face an uphill battle, but not all are created equal. Luckily for you, StockStory is here to separate the promising ones from the weak. That said, here is one unprofitable company with the potential to become an industry leader and two that could struggle to survive.

Two Stocks to Sell:

Bark (BARK)

Trailing 12-Month GAAP Operating Margin: -7.3%

Making a name for itself with the BarkBox, Bark (NYSE: BARK) specializes in subscription-based, personalized pet products.

Why Is BARK Risky?

1. Sales tumbled by 4.9% annually over the last two years, showing consumer trends are working against its favor
2. Persistent operating margin losses suggest the business manages its expenses poorly
3. Negative free cash flow raises questions about the return timeline for its investments

Bark’s stock price of $0.88 implies a valuation ratio of 44x forward P/E. Read our free research report to see why you should think twice about including BARK in your portfolio.

Compass (COMP)

Trailing 12-Month GAAP Operating Margin: -1.3%

Fueled by its mission to replace the "paper-driven, antiquated workflow" of buying a house, Compass (NYSE: COMP) is a digital-first company operating a residential real estate brokerage in the United States.

Why Are We Cautious About COMP?

1. Sluggish trends in its principal agents suggest customers aren’t adopting its solutions as quickly as the company hoped
2. Suboptimal cost structure is highlighted by its history of operating margin losses
3. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 1.3% for the last two years

Compass is trading at $6.45 per share, or 14.8x forward P/E. Dive into our free research report to see why there are better opportunities than COMP.

One Stock to Buy:

Roblox (RBLX)

Trailing 12-Month GAAP Operating Margin: -26.5%

Best known for its wide assortment of user-generated content, Roblox (NYSE: RBLX) is an online gaming platform and game creation system.

Why Should You Buy RBLX?

1. Daily Active Users have grown by 22.1% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
2. Demand for the next 12 months is expected to accelerate above its three-year trend as Wall Street forecasts robust revenue growth of 43.8%
3. Disciplined cost controls and effective management resulted in a strong two-year EBITDA margin of 20.5%

At $112.06 per share, Roblox trades at 66.4x forward EV/EBITDA. Is now a good time to buy? See for yourself in our full research report, it’s free.

Stocks We Like Even More

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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