3 Unprofitable Stocks Walking a Fine Line

Unprofitable companies face headwinds as they struggle to keep operating expenses under control. Some may be investing heavily, but the majority fail to convert spending into sustainable growth.

A lack of profits can lead to trouble, but StockStory helps you identify the businesses that stand a chance of making it through. That said, here are three unprofitable companiesthat don’t make the cut and some better opportunities instead.

Domo (DOMO)

Trailing 12-Month GAAP Operating Margin: -18.7%

Founded by Josh James after selling his former business Omniture to Adobe, Domo (NASDAQ:DOMO) provides business intelligence software that allows managers to access and visualize critical business metrics in real-time, using their smartphones.

Why Should You Dump DOMO?

1. Offerings couldn’t generate interest over the last year as its billings have averaged 3.5% declines
2. Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue
3. Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders

Domo’s stock price of $7.55 implies a valuation ratio of 0.9x forward price-to-sales. Read our free research report to see why you should think twice about including DOMO in your portfolio.

ThredUp (TDUP)

Trailing 12-Month GAAP Operating Margin: -15.6%

Founded to revolutionize thrifting, ThredUp (NASDAQ:TDUP) is a leading online fashion resale marketplace offering a wide selection of gently-used clothing and accessories.

Why Is TDUP Risky?

1. Sluggish trends in its orders suggest customers aren’t adopting its solutions as quickly as the company hoped
2. Historical operating losses point to an inefficient cost structure
3. Cash-burning tendencies make us wonder if it can sustainably generate shareholder value

At $4.26 per share, ThredUp trades at 64.1x forward EV-to-EBITDA. To fully understand why you should be careful with TDUP, check out our full research report (it’s free).

Myriad Genetics (MYGN)

Trailing 12-Month GAAP Operating Margin: -14.7%

Founded in 1991 as one of the pioneers in translating genetic discoveries into clinical applications, Myriad Genetics (NASDAQ:MYGN) develops genetic tests that assess disease risk, guide treatment decisions, and provide insights across oncology, women's health, and mental health.

Why Do We Steer Clear of MYGN?

1. Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
2. Earnings per share fell by 34.9% annually over the last five years while its revenue was flat, partly because it diluted shareholders
3. Push for growth has led to negative returns on capital, signaling value destruction

Myriad Genetics is trading at $7.39 per share, or 136.1x forward P/E. Check out our free in-depth research report to learn more about why MYGN doesn’t pass our bar.

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.

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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.