1 Unprofitable Stock with Promising Prospects and 2 Facing Headwinds

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 is one unprofitable company that could turn today’s losses into long-term gains and two that may never reach the Promised Land.

Two Stocks to Sell:

Elastic (ESTC)

Trailing 12-Month GAAP Operating Margin: -2%

Built on the powerful open-source Elasticsearch technology that powers search functionality for thousands of websites worldwide, Elastic (NYSE:ESTC) provides a search and AI platform that helps organizations find insights from their data, monitor applications, and protect against security threats.

Why Are We Hesitant About ESTC?

1. Estimated sales growth of 12.5% for the next 12 months implies demand will slow from its two-year trend
2. Operating profits and efficiency rose over the last year as it benefited from some fixed cost leverage
3. Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 2.4 percentage points over the next year

Elastic’s stock price of $90.12 implies a valuation ratio of 5.4x forward price-to-sales. Dive into our free research report to see why there are better opportunities than ESTC.

Jazz Pharmaceuticals (JAZZ)

Trailing 12-Month GAAP Operating Margin: -7.1%

Originally founded in 2003 and now headquartered in Ireland following a 2012 tax inversion merger, Jazz Pharmaceuticals (NASDAQGS:JAZZ) develops and markets medicines for sleep disorders, epilepsy, and cancer, with a focus on treatments for patients with limited therapeutic options.

Why Is JAZZ Risky?

1. Annual revenue growth of 4.2% over the last two years was below our standards for the healthcare sector
2. Efficiency has decreased over the last five years as its adjusted operating margin fell by 25.4 percentage points
3. Revenue growth over the past five years was nullified by the company’s new share issuances as its earnings per share fell by 12.1% annually

At $138.88 per share, Jazz Pharmaceuticals trades at 6.5x forward P/E. To fully understand why you should be careful with JAZZ, check out our full research report (it’s free for active Edge members).

One Stock to Watch:

MongoDB (MDB)

Trailing 12-Month GAAP Operating Margin: -7.5%

Named after "humongous database," reflecting its ability to handle massive data loads, MongoDB (NASDAQ:MDB) provides a flexible document-based database platform that helps developers build, deploy, and maintain modern applications more efficiently.

Why Are We Positive On MDB?

1. Annual revenue growth of 34.6% over the last five years was superb and indicates its market share is rising
2. ARR growth averaged 25.2% over the last year, showing customers are willing to take multi-year bets on its software

MongoDB is trading at $354 per share, or 11.1x forward price-to-sales. Is now a good time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.

Stocks We Like Even More

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound 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 Comfort Systems (+782% 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

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