3 Unprofitable Stocks Walking a Fine Line
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.
A lack of profits can lead to trouble, but StockStory helps you identify the businesses that stand a chance of making it through. Keeping that in mind, here are three unprofitable companiesto steer clear of and a few better alternatives.
SmartRent (SMRT)
Trailing 12-Month GAAP Operating Margin: -14.9%
Founded by an employee at a real estate rental company, SmartRent (NYSE:SMRT) provides smart home devices and software for multifamily residential properties, single-family rental homes, and student housing communities.
Why Does SMRT Give Us Pause?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 16.6% annually over the last two years
- Historically negative EPS casts doubt for cautious investors and clouds its long-term earnings prospects
- Negative free cash flow raises questions about the return timeline for its investments
At $1.38 per share, SmartRent trades at 38.8x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including SMRT in your portfolio.
NeoGenomics (NEO)
Trailing 12-Month GAAP Operating Margin: -8.9%
Operating a network of CAP-accredited and CLIA-certified laboratories across the United States and United Kingdom, NeoGenomics (NASDAQ:NEO) provides specialized cancer diagnostic testing services, including genetic analysis, molecular testing, and pathology consultation for oncologists and healthcare providers.
Why Is NEO Not Exciting?
- Revenue base of $766.3 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Negative returns on capital show management lost money while trying to expand the business
- High net-debt-to-EBITDA ratio of 6× increases the risk of forced asset sales or dilutive financing if operational performance weakens
NeoGenomics’s stock price of $16.73 implies a valuation ratio of 60x forward P/E. If you’re considering NEO for your portfolio, see our FREE research report to learn more.
Novavax (NVAX)
Trailing 12-Month GAAP Operating Margin: -56.6%
Pioneering a nanoparticle technology that mimics the molecular structure of disease pathogens, Novavax (NASDAQ:NVAX) develops and commercializes protein-based vaccines for infectious diseases, with a primary focus on its COVID-19 vaccine and combination respiratory vaccine candidates.
Why Are We Bearish on NVAX?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 18.9% annually over the last five years
- Adjusted operating margin declined by 26.9 percentage points over the last two years as its sales cratered
- Negative free cash flow raises questions about the return timeline for its investments
Novavax is trading at $8.38 per share, or 6x forward price-to-sales. Check out our free in-depth research report to learn more about why NVAX doesn’t pass our bar.
Stocks We Like More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.