3 Unprofitable Stocks with Questionable Fundamentals

Running at a loss can be a red flag. Many of these businesses face mounting challenges as competition increases and funding becomes harder to secure.

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 companiesthat don’t make the cut and some better opportunities instead.

Asana (ASAN)

Trailing 12-Month GAAP Operating Margin: -36.8%

Founded in 2008 by Facebook’s co-founder Dustin Moskovitz, Asana (NYSE:ASAN) is a cloud-based project management software, where you can plan and assign tasks to employees and monitor and discuss progress of work.

Why Does ASAN Give Us Pause?

1. Customers had second thoughts about committing to its platform over the last year as its average billings growth of 9.4% underwhelmed
2. Platform has low switching costs as its net revenue retention rate of 97.5% demonstrates high turnover
3. Historical operating losses show it had an inefficient cost structure while scaling

At $14.52 per share, Asana trades at 4.3x forward price-to-sales. Check out our free in-depth research report to learn more about why ASAN doesn’t pass our bar.

Stitch Fix (SFIX)

Trailing 12-Month GAAP Operating Margin: -6.7%

One of the original subscription box companies, Stitch Fix (NASDAQ:SFIX) is an online personal styling and fashion service that curates personalized clothing selections for customers.

Why Should You Sell SFIX?

1. Number of active clients has disappointed over the past two years, indicating weak demand for its offerings
2. Persistent operating losses suggest the business manages its expenses poorly
3. Sales were less profitable over the last five years as its earnings per share fell by 31.9% annually, worse than its revenue declines

Stitch Fix’s stock price of $3 implies a valuation ratio of 10.6x forward EV-to-EBITDA. If you’re considering SFIX for your portfolio, see our FREE research report to learn more.

Kura Sushi (KRUS)

Trailing 12-Month GAAP Operating Margin: -5%

Known for its conveyor belt that transports dishes to diners, Kura Sushi (NASDAQ:KRUS) is a chain of sushi restaurants serving traditional Japanese fare with a touch of modernity and technology.

Why Do We Pass on KRUS?

1. Revenue base of $258.4 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
2. Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 4.6 percentage points
3. Cash-burning history makes us doubt the long-term viability of its business model

Kura Sushi is trading at $59.01 per share, or 898.9x forward price-to-earnings. Read our free research report to see why you should think twice about including KRUS in your portfolio.

Stocks We Like More

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.