Unprofitable companies face headwinds as they struggle to keep operating expenses under control. Some may be investing heavily, but the majority fail to convert spending into sustainable growth.
Finding the right unprofitable companies is difficult, which is why we started StockStory - to help you navigate the market. That said, here are three unprofitable companiesto avoid and some better opportunities instead.
Varonis Systems (VRNS)
Trailing 12-Month GAAP Operating Margin: -22%
Beginning with protecting Windows file shares in 2005 and evolving into a comprehensive security platform, Varonis Systems (NASDAQ: VRNS) provides data security software that helps organizations protect sensitive information, detect threats, and comply with privacy regulations.
Why Do We Think Twice About VRNS?
- Annual revenue growth of 11.7% over the last two years was below our standards for the software sector
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 2.7 percentage points
- Free cash flow margin is forecasted to shrink by 1.5 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
At $32.90 per share, Varonis Systems trades at 5.4x forward price-to-sales. Check out our free in-depth research report to learn more about why VRNS doesn’t pass our bar.
Beyond Meat (BYND)
Trailing 12-Month GAAP Operating Margin: -83%
A pioneer at the forefront of the plant-based protein revolution, Beyond Meat (NASDAQ: BYND) is a food company specializing in alternatives to traditional meat products.
Why Do We Pass on BYND?
- Falling unit sales over the past two years show it’s struggled to move its products and had to rely on price increases
- Free cash flow margin dropped by 16.7 percentage points over the last year, implying the company became more capital intensive as competition picked up
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Beyond Meat’s stock price of $0.93 implies a valuation ratio of 0.3x forward price-to-sales. If you’re considering BYND for your portfolio, see our FREE research report to learn more.
Supernus Pharmaceuticals (SUPN)
Trailing 12-Month GAAP Operating Margin: -5.4%
With a diverse portfolio of eight FDA-approved medications targeting neurological conditions, Supernus Pharmaceuticals (NASDAQ: SUPN) develops and markets treatments for central nervous system disorders including epilepsy, ADHD, Parkinson's disease, and migraine.
Why Do We Avoid SUPN?
- 5.9% annual revenue growth over the last five years was slower than its healthcare peers
- Smaller revenue base of $681.5 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Supernus Pharmaceuticals is trading at $49.54 per share, or 19.7x forward P/E. To fully understand why you should be careful with SUPN, check out our full research report (it’s free).
Stocks We Like More
Check out the high-quality names we’ve flagged in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
