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.
Unprofitable companies face an uphill battle, but not all are created equal. Luckily for you, StockStory is here to separate the promising ones from the weak. Keeping that in mind, here is one unprofitable company investing heavily to secure market share and two best left off your radar.
Two Stocks to Sell:
Skillz (SKLZ)
Trailing 12-Month GAAP Operating Margin: -37.5%
Taking a new twist at video gaming, Skillz (NYSE: SKLZ) offers developers a platform to create and distribute mobile games where players can pay fees to compete for cash prizes.
Why Should You Sell SKLZ?
- Struggled with new customer acquisition as its paying monthly active users averaged 33.6% declines
- Suboptimal cost structure is highlighted by its history of EBITDA margin losses
- Cash burn makes us question whether it can achieve sustainable long-term growth
At $6.69 per share, Skillz trades at 1.3x forward price-to-gross profit. Dive into our free research report to see why there are better opportunities than SKLZ.
The Real Brokerage (REAX)
Trailing 12-Month GAAP Operating Margin: -1%
Founded in Toronto, Canada in 2014, The Real Brokerage (NASDAQ: REAX) is a technology-driven real estate brokerage firm combining a tech-centric model with an agent-centric philosophy.
Why Is REAX Risky?
- Historical operating margin losses point to an inefficient cost structure
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 9% annually while its revenue grew
- Poor free cash flow margin of 3.3% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
The Real Brokerage is trading at $4.15 per share, or 15.5x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including REAX in your portfolio.
One Stock to Watch:
Impinj (PI)
Trailing 12-Month GAAP Operating Margin: -1.3%
Founded by Caltech professor Carver Mead and one of his students Chris Diorio, Impinj (NASDAQ: PI) is a maker of radio-frequency identification (RFID) hardware and software.
Why Do We Watch PI?
- Impressive 11.9% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 49.5% over the last five years outstripped its revenue performance
- Free cash flow margin expanded by 23.7 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
Impinj’s stock price of $108 implies a valuation ratio of 66.4x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out 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 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 Tecnoglass (+1,754% 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
