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.

A lack of profits can lead to trouble, but StockStory helps you identify the businesses that stand a chance of making it through. That said, here are three unprofitable companiesthat don’t make the cut and some better opportunities instead.

ThredUp (TDUP)

Trailing 12-Month GAAP Operating Margin: -7%

Founded to revolutionize thrifting, ThredUp (NASDAQ: TDUP) is a leading online fashion resale marketplace offering a wide selection of gently-used clothing and accessories.

Why Should You Sell TDUP?

1. Sluggish trends in its orders 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. Low free cash flow margin of -0.3% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders

ThredUp is trading at $3.41 per share, or 21.3x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than TDUP.

fuboTV (FUBO)

Trailing 12-Month GAAP Operating Margin: -2.6%

Originally launched as a soccer streaming platform, fuboTV (NYSE: FUBO) is a video streaming service specializing in live sports, news, and entertainment content.

Why Do We Steer Clear of FUBO?

1. Sluggish trends in its domestic subscribers suggest customers aren’t adopting its solutions as quickly as the company hoped
2. Historical operating margin losses point to an inefficient cost structure
3. Negative free cash flow raises questions about the return timeline for its investments

At $1.15 per share, fuboTV trades at 1.3x forward EV-to-EBITDA. If you’re considering FUBO for your portfolio, see our FREE research report to learn more.

Azenta (AZTA)

Trailing 12-Month GAAP Operating Margin: -3.7%

Serving as the guardian of some of medicine's most valuable materials, Azenta (NASDAQ: AZTA) provides biological sample management, storage, and genomic services that help pharmaceutical and biotechnology companies preserve and analyze critical research materials.

Why Do We Think AZTA Will Underperform?

1. Annual sales declines of 2.7% for the past two years show its products and services struggled to connect with the market during this cycle
2. Sales were less profitable over the last five years as its earnings per share fell by 18.6% annually, worse than its revenue declines
3. Long-term business health is up for debate as its cash burn has increased over the last five years

Azenta’s stock price of $21.57 implies a valuation ratio of 24.3x forward P/E. Read our free research report to see why you should think twice about including AZTA in your portfolio.

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