3 Cash-Burning Stocks with Open Questions

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

fuboTV (FUBO)

Trailing 12-Month Free Cash Flow Margin: -3.2%

Originally launched as a soccer streaming platform, fuboTV (NYSE:FUBO) is a video streaming service specializing in live sports, news, and entertainment content.

Why Should You Dump FUBO?

1. Sluggish trends in its domestic subscribers suggest customers aren’t adopting its solutions as quickly as the company hoped
2. Suboptimal cost structure is highlighted by its history of operating margin losses
3. Negative free cash flow raises questions about the return timeline for its investments

fuboTV’s stock price of $1.19 implies a valuation ratio of 1.4x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why FUBO doesn’t pass our bar.

Bally's (BALY)

Trailing 12-Month Free Cash Flow Margin: -10.7%

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 Do We Avoid BALY?

1. 2% annual revenue growth over the last two years was slower than its consumer discretionary peers
2. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
3. Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders

At $13.41 per share, Bally's trades at 10.9x forward EV-to-EBITDA. To fully understand why you should be careful with BALY, check out our full research report (it’s free).

EVgo (EVGO)

Trailing 12-Month Free Cash Flow Margin: -32.4%

Created through a settlement between NRG Energy and the California Public Utilities Commission, EVgo (NASDAQ:EVGO) is a provider of electric vehicle charging solutions, operating fast charging stations across the United States.

Why Does EVGO Fall Short?

1. Historical operating margin losses point to an inefficient cost structure
2. Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

EVgo is trading at $2.22 per share, or 55.1x forward EV-to-EBITDA. If you’re considering EVGO for your portfolio, see our FREE research report to learn more.

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