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.
Finding the right unprofitable companies is difficult, which is why we started StockStory - to help you navigate the market. 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:
Amplitude (AMPL)
Trailing 12-Month GAAP Operating Margin: -33.7%
Born out of a failed voice recognition startup by founder Spenser Skates, Amplitude (NASDAQ: AMPL) is data analytics software helping companies improve and optimize their digital products.
Why Does AMPL Fall Short?
- Products, pricing, or go-to-market strategy may need some adjustments as its 9.9% average billings growth over the last year was weak
- Customers generally do not adopt complementary products as its 100% net revenue retention rate lags behind the industry standard
- Historical operating margin losses point to an inefficient cost structure
At $11.88 per share, Amplitude trades at 4.2x forward price-to-sales. Check out our free in-depth research report to learn more about why AMPL doesn’t pass our bar.
STAAR Surgical (STAA)
Trailing 12-Month GAAP Operating Margin: -48.8%
With over 2.5 million implants performed worldwide, STAAR Surgical (NASDAQ: STAA) designs and manufactures implantable lenses that correct vision problems without removing the eye's natural lens.
Why Is STAA Risky?
- Weak constant currency growth over the past two years indicates challenges in maintaining its market share
- Free cash flow margin shrank by 35.2 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Diminishing returns on capital suggest its earlier profit pools are drying up
STAAR Surgical’s stock price of $27.35 implies a valuation ratio of 115.8x forward P/E. If you’re considering STAA for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
DraftKings (DKNG)
Trailing 12-Month GAAP Operating Margin: -6.2%
Getting its start in daily fantasy sports, DraftKings (NASDAQ: DKNG) is a digital sports entertainment and gaming company.
Why Is DKNG Interesting?
- Number of monthly unique players has surged, pointing to elevated demand
- Expected revenue growth of 27.4% for the next year suggests its market share will rise
- Earnings growth has massively outpaced its peers over the last five years as its EPS has compounded at 22.2% annually
DraftKings is trading at $42.89 per share, or 21x forward EV-to-EBITDA. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Strong Momentum Stocks for this week. 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-micro-cap company Kadant (+351% 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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