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.
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.
Amplitude (AMPL)
Trailing 12-Month GAAP Operating Margin: -34.9%
Born out of a failed voice recognition startup by founder Spenser Skates, Amplitude (NASDAQ:AMPL) is data analytics software helping companies improve and optimize their digital products.
Why Do We Think Twice About AMPL?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 8.7% underwhelmed
- Poor expense management has led to operating margin losses
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Amplitude is trading at $12.93 per share, or 5x forward price-to-sales. To fully understand why you should be careful with AMPL, check out our full research report (it’s free).
Redwire (RDW)
Trailing 12-Month GAAP Operating Margin: -14.4%
Based in Jacksonville, Florida, Redwire (NYSE:RDW) is a provider of systems and components used in space infrastructure.
Why Does RDW Worry Us?
- Earnings per share fell by 38.9% annually over the last four years while its revenue grew, partly because it diluted shareholders
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Redwire’s stock price of $18.24 implies a valuation ratio of 22.2x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than RDW.
Hertz (HTZ)
Trailing 12-Month GAAP Operating Margin: -11.4%
Started with a dozen Model T Fords, Hertz (NASDAQ:HTZ) is a global car rental company providing vehicle rental services to leisure and business travelers.
Why Should You Dump HTZ?
- Weak unit sales over the past two years imply it may need to invest in improvements to get back on track
- Eroding returns on capital suggest its historical profit centers are aging
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $6.04 per share, Hertz trades at 5.1x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why HTZ doesn’t pass our bar.
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.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market 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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.