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 are three unprofitable companiesto avoid and some better opportunities instead.

Udemy (UDMY)

Trailing 12-Month GAAP Operating Margin: -9%

With courses ranging from investing to cooking to computer programming, Udemy (NASDAQ: UDMY) is an online learning platform that connects learners with expert instructors who specialize in a wide range of topics.

Why Does UDMY Fall Short?

1. Decision to emphasize platform growth over monetization has contributed to 1.6% annual declines in its average revenue per buyer
2. Sales are projected to remain flat over the next 12 months as demand decelerates from its three-year trend
3. Expensive marketing campaigns hurt its profitability and make us wonder what would happen if it let up on the gas

At $6.94 per share, Udemy trades at 11.3x forward EV/EBITDA. Check out our free in-depth research report to learn more about why UDMY doesn’t pass our bar.

Zeta (ZETA)

Trailing 12-Month GAAP Operating Margin: -4.5%

Co-founded by former Apple CEO John Sculley, Zeta Global (NYSE: ZETA) provides software and data analytics tools that help companies market their products to billions of customers.

Why Are We Hesitant About ZETA?

1. High servicing costs result in a relatively inferior gross margin of 60.4% that must be offset through increased usage
2. Historical operating margin losses show it had an inefficient cost structure while scaling
3. Poor free cash flow margin of 9.8% for the last year limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends

Zeta’s stock price of $15.10 implies a valuation ratio of 2.5x forward price-to-sales. Dive into our free research report to see why there are better opportunities than ZETA.

JELD-WEN (JELD)

Trailing 12-Month GAAP Operating Margin: -7.5%

Founded in the 1960s as a general wood-making company, JELD-WEN (NYSE: JELD) manufactures doors, windows, and other related building products.

Why Do We Steer Clear of JELD?

1. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
2. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 10.7 percentage points
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

JELD-WEN is trading at $3.89 per share, or 6.4x forward P/E. To fully understand why you should be careful with JELD, check out our full research report (it’s free).

Stocks We Like 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.

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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 Exlservice (+354% 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