3 Cash-Burning Stocks with Warning Signs

While some companies burn cash to fuel expansion, others struggle to turn spending into sustainable growth. A high cash burn rate without a strong balance sheet can leave investors exposed to significant downside.

Negative cash flow can lead to trouble, but StockStory helps you identify the businesses that stand a chance of making it through. That said, here are three cash-burning companies to steer clear of and a few better alternatives.

Skillz (SKLZ)

Trailing 12-Month Free Cash Flow Margin: -71.4%

Taking a new twist at video gaming, Skillz (NYSE:SKLZ) offers developers a platform to create and distribute mobile games where players can pay fees to compete for cash prizes.

Why Should You Dump SKLZ?

1. Value proposition isn’t resonating strongly as its paying monthly active users averaged 24.5% drops over the last two years
2. Cash burn has widened over the last few years, making us question whether it can reliably generate shareholder value
3. Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

Skillz’s stock price of $6.86 implies a valuation ratio of 1x forward price-to-gross profit. To fully understand why you should be careful with SKLZ, check out our full research report (it’s free for active Edge members).

Perma-Fix (PESI)

Trailing 12-Month Free Cash Flow Margin: -27.4%

Tackling hazardous waste challenges since 1990, Perma-Fix (NASDAQ:PESI) provides environmental waste treatment services.

Why Should You Sell PESI?

1. Sales tumbled by 8.1% annually over the last five years, showing market trends are working against its favor during this cycle
2. Free cash flow margin shrank by 31.6 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

Perma-Fix is trading at $14.10 per share, or 3.2x forward price-to-sales. Read our free research report to see why you should think twice about including PESI in your portfolio.

Stratasys (SSYS)

Trailing 12-Month Free Cash Flow Margin: -1.9%

Born from the Founder’s idea of making a toy frog with a glue gun, Stratasys (NASDAQ:SSYS) offers 3D printers and related materials, software, and services to many industries.

Why Are We Out on SSYS?

1. Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
2. Poor expense management has led to operating margin losses
3. Free cash flow margin dropped by 6.9 percentage points over the last five years, implying the company became more capital intensive as competition picked up

At $12.47 per share, Stratasys trades at 86.1x forward P/E. To fully understand why you should be careful with SSYS, check out our full research report (it’s free for active Edge members).

High-Quality Stocks for All Market Conditions

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Don’t let fear keep you from great opportunities and take a look at 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).

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