1 Cash-Burning Stock with Exciting Potential and 2 Facing Challenges

Rapid spending isn’t always a sign of progress. Some cash-burning businesses fail to convert investments into meaningful competitive advantages, leaving them vulnerable.

Just because a company is spending heavily doesn’t mean it’s on the right track, and StockStory is here to separate the winners from the losers. That said, here is one high-risk, high-reward company with the potential to scale into a market leader and two that could run into serious trouble.

Two Stocks to Sell:

Domo (DOMO)

Trailing 12-Month Free Cash Flow Margin: -1.6%

Named for the Japanese word meaning "thank you very much," Domo (NASDAQ:DOMO) provides a cloud-based business intelligence platform that connects people with real-time data and insights across organizations.

Why Do We Steer Clear of DOMO?

1. Offerings couldn’t generate interest over the last year as its billings have averaged 1.1% declines
2. Projected sales for the next 12 months are flat and suggest demand will be subdued
3. Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue

Domo is trading at $13.49 per share, or 1.6x forward price-to-sales. To fully understand why you should be careful with DOMO, check out our full research report (it’s free for active Edge members).

Bally's (BALY)

Trailing 12-Month Free Cash Flow Margin: -6.9%

Headquartered in Providence, Rhode Island, Bally's Corporation (NYSE:BALY) is a diversified global casino-entertainment company that owns and manages casinos, resorts, and online gaming platforms.

Why Are We Out on BALY?

1. 2.5% annual revenue growth over the last two years was slower than its consumer discretionary peers
2. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
3. Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

At $17.12 per share, Bally's trades at 2.2x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including BALY in your portfolio.

One Stock to Watch:

Rivian (RIVN)

Trailing 12-Month Free Cash Flow Margin: -8.4%

The manufacturer of Amazon’s delivery trucks, Rivian (NASDAQ:RIVN) designs, manufactures, and sells electric vehicles and commercial delivery vans.

Why Does RIVN Stand Out?

1. Annual revenue growth of 24.2% over the past two years was outstanding, reflecting market share gains this cycle
2. Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 33.4% outpaced its revenue gains

Rivian’s stock price of $15.35 implies a valuation ratio of 3x forward price-to-sales. Is now a good time to buy? See for yourself in our full research report, it’s free for active Edge members.

Stocks We Like Even More

Fresh US-China trade tensions just tanked stocks—but strong bank earnings are fueling a sharp rebound. Don’t miss the bounce.

Don’t let fear keep you from great opportunities and take a look at Top 5 Strong Momentum Stocks for this week. 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-micro-cap company Kadant (+351% 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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