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.
Blink Charging (BLNK)
Trailing 12-Month GAAP Operating Margin: -158%
One of the first EV charging companies to go public, Blink Charging (NASDAQ: BLNK) is a manufacturer, owner, operator, and provider of electric vehicle charging equipment and networked EV charging services.
Why Is BLNK Not Exciting?
- Issuance of new shares over the last five years caused its earnings per share to fall by 10.2% annually while its revenue grew
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
At $0.80 per share, Blink Charging trades at 0.6x forward price-to-sales. To fully understand why you should be careful with BLNK, check out our full research report (it’s free).
Beyond Meat (BYND)
Trailing 12-Month GAAP Operating Margin: -47.8%
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 Think BYND Will Underperform?
- Declining unit sales over the past two years imply it may need to invest in product improvements to get back on track
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Beyond Meat’s stock price of $2.57 implies a valuation ratio of 0.5x forward price-to-sales. If you’re considering BYND for your portfolio, see our FREE research report to learn more.
Tilly's (TLYS)
Trailing 12-Month GAAP Operating Margin: -6.1%
With an emphasis on skate and surf culture, Tilly’s (NYSE: TLYS) is a specialty retailer that sells clothing, footwear, and accessories geared towards fashion-forward teens and young adults.
Why Should You Dump TLYS?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Sales were less profitable over the last five years as its earnings per share fell by 32.2% annually, worse than its revenue declines
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Tilly's is trading at $1.59 per share, or 0.1x forward price-to-sales. Read our free research report to see why you should think twice about including TLYS in your portfolio.
Stocks We Like More
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