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. Keeping that in mind, here are three unprofitable companiesthat don’t make the cut and some better opportunities instead.

Offerpad (OPAD)

Trailing 12-Month GAAP Operating Margin: -5.5%

Known for giving homeowners cash offers within 24 hours, Offerpad (NYSE: OPAD) operates a tech-enabled platform specializing in direct home buying and selling solutions.

Why Do We Pass on OPAD?

1. Number of homes purchased has disappointed over the past two years, indicating weak demand for its offerings
2. Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
3. EBITDA losses may force it to accept punitive lending terms or high-cost debt

Offerpad is trading at $1.37 per share, or 0x forward price-to-sales. Read our free research report to see why you should think twice about including OPAD in your portfolio.

SoundHound AI (SOUN)

Trailing 12-Month GAAP Operating Margin: -181%

Founded in 2005, SoundHound AI (NASDAQ: SOUN) develops independent voice artificial intelligence solutions that enable businesses across various industries to offer customized conversational experiences to consumers.

Why Are We Hesitant About SOUN?

1. Gross margin of 44.1% is way below its competitors, leaving less money to invest in areas like marketing and R&D
2. Operating margin dropped by 39 percentage points over the last year as the company focused on expansion rather than profitability
3. Cash-burning history makes us doubt the long-term viability of its business model

SoundHound AI’s stock price of $11.46 implies a valuation ratio of 28.8x forward price-to-sales. Dive into our free research report to see why there are better opportunities than SOUN.

Enovis (ENOV)

Trailing 12-Month GAAP Operating Margin: -36.6%

With a focus on helping patients regain or maintain their natural motion, Enovis (NYSE: ENOV) develops and manufactures medical devices for orthopedic care, from injury prevention and pain management to joint replacement and rehabilitation.

Why Do We Think ENOV Will Underperform?

1. Annual sales declines of 9.1% for the past five years show its products and services struggled to connect with the market during this cycle
2. Negative returns on capital show that some of its growth strategies have backfired, and its shrinking returns suggest its past profit sources are losing steam
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

At $33.02 per share, Enovis trades at 10x forward P/E. Check out our free in-depth research report to learn more about why ENOV doesn’t pass our bar.

Stocks We Like More

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio 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-micro-cap company Tecnoglass (+1,754% 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